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9
ANNUAL REPORT
2019
From transformation,
to growth.
CountPlus Annual Report 2019 ABOUT COUNTPLUS
1
CountPlus continues to build towards becoming Australia’s leading network
of professional accounting and advice firms – aligned through shared values,
mutual success, and our sense of community.
CountPlus operates an ‘Owner, Driver – Partner’ model that provides
investment, leadership and intellectual capital to the firms in its network.
We also guide and nurture the leadership teams while delivering best-in-class
financial systems and governance structures.
We are committed to realising our future where accounting services and
financial advice are delivered in a method that puts the client at the centre
of everything we do, thereby driving our firms to increase their value,
ultimately for CountPlus' shareholders.
Our model
Î Inspires loyalty and initiative, by allowing firms to preserve their local brand
and unique identity;
Î Builds confidence by offering strategic support, funding for growth, scalable
benefits and succession planning;
Î Improves performance at the individual firm level while leveraging the
benefits of a national group, its collective wisdom, expertise and best
practice; and
Î Drives the benefits of equity ownership with the attendant opportunities
of ‘skin in the game’ culture, accountability and reward.
Our recent acquisition of the Count Financial business from Commonwealth
Bank of Australia, to be completed on 1 October 2019, is a strategic investment
that will allow us to scale the CountPlus model, while introducing our beliefs
and ethos to a network now unconstrained from the bank ownership structure.
CountPlus has a non-negotiable requirement that all parts of our network
fit the CountPlus family photograph, and share our five key focus areas
of Firms, People, Focus, Financial and Community.
The company is in strong shape to leverage ongoing growth opportunities
for its shareholders, member firms and their clients.
CountPlus Annual Report 2019 CountPlus Annual Report 2019 CONTENTS
Chairman's Report
CEO Report
The Harvard Experience
Case Studies
Financial Summary
CountPlus Board
Directors' Report
Auditor's Independence Declaration
Financial Statements
ASX Additional Information
Investors' Information
3
4
6
8
9
14
16
19
36
39
97
98
CountPlus Annual Report 2019 4 CHAIRMAN'S REPORT
Ray Kellerman
The evolution of CountPlus
The positive changes undertaken in our firms have taken hold, with firm
profit margins and working capital management improving. Our improved
performance has seen a final $0.01 cent per share dividend announced at
30 June 2019, in addition to the $0.01 cent dividend announced at the half year.
We have also undertaken a transformational acquisition in purchasing Count
Financial from the Commonwealth Bank of Australia, which will complete
on 1 October 2019.
The Board of CountPlus is focused on achieving the objectives of the Company,
having worked with the leadership team in delivering meaningful cultural
change over the past two years. Extensive work has been done to strengthen
the overall financial position of the Company, and we are preparing to shift our
focus to the growth of business earnings.
Leadership
There is a need for strong values-based leadership in financial services, and
it requires the elevation of a new type of leader into the professional financial
advice sector. This style of leadership was front of mind when CountPlus made
key appointments to the new Board of Count Financial and the new Count
Financial senior management team.
Transformation
The CountPlus Board believes that the case for quality advice converged with
professional accounting services continues to grow, in an environment where
trust among consumers towards the financial services sector is low. The Royal
Commission exposed some of the bad practices of the industry and this will
open the way for businesses that are focused on delivering value to clients.
We believe that acting in the client’s best interest is entirely consistent with
driving increased value in CountPlus' assets, thereby ultimately increasing
returns for our shareholders.
The CountPlus Board understands the work that is required to successfully
integrate the Count Financial business into CountPlus. We are focused
on raising the bar for Count Financial member firms and at the same time
creating an environment of mutual success. The CountPlus Board is encouraged
by the quality and experience of the new Count Financial team, and we have
the necessary resources to deploy to ensure this merger is successful for
CountPlus' shareholders.
There is a need for
strong values-based
leadership in financial
services, and this
principle will ensure
alignment of
shareholder and
client interests.
CountPlus Annual Report 2019 5
Moving to growth
As CountPlus has completed its turnaround, the Company can now focus
on growth. Its core and satellite approach will allow for new investments to
be made that will support the revenue model in two ways – through direct
investments and ownership in underlying firms, and the revenue for services
that will move from the member firm network, via Count Financial, to CountPlus.
While the successful transition of Count Financial to our ownership is a high
priority, improving the performance of individual firms will continue to be
a focus of the management team in order to increase returns to shareholders.
Strategic decisions regarding potential acquisitions will be made in the context
of the composition of the network itself and the ability to drive earnings across
the CountPlus group.
Ray Kellerman
Chairman
CountPlus Annual Report 2019 6 CEO REPORT
Matthew Rowe
A new era for CountPlus
On behalf of the Executive team at CountPlus Limited, I am pleased to report
that our two-year turnaround strategy that commenced in May 2017 is complete.
The strategy has positioned both the business and our member firms, as planned,
to deliver growth across the network.
We have focussed on the four cornerstones of professional practice – planning,
people, leadership, and process – in our member firms. In addition, governance
structures have been embedded to ensure we provide our firms the guidance
and tools they need to achieve their full potential.
Improved financial performance and profitability of member firms, and increased
revenue per staff member, illustrate that the efficiencies and structures we have
put into place are now rewarding shareholders.
The turnaround
Two years ago, we needed to devise and implement a strategic plan
to restructure the business, embed cultural change and position our firms
to achieve sustainable growth. That turnaround focused on the CountPlus
business itself, and on developing each member firm to deliver on its potential.
Today, all our firms have a strategic plan in place, and four out of five have
a new leadership team. We have helped them become more efficient,
evidenced through our average firm profit margin now being 20%, lock-up
sitting at 82 days, productivity improvements as measured by revenue per
full-time employee, and staff turnover at best practice levels.
Count Financial
The acquisition of Count Financial, which will complete on 1 October 2019,
is clearly a highlight and the transaction made perfect sense for CountPlus.
As clear advocates for the delivery of accounting and financial advice
through one model, returning Count Financial to its CountPlus home allows
us to create shareholder value based on the fact we expect it to generate
earnings for shareholders, while also giving us the opportunity to scale.
The practicalities of the merger will require careful implementation but
we understand the business and the challenges it faces, and have installed
a team that is comprised of highly experienced and credentialled financial
advice leaders, as well as ensuring we listen carefully to the voice of the client.
Our objective is to align the Count Financial business with our own values,
our key strategic drivers and our worldview that client best interest is central
to every decision we make.
The Financial Advice sector is facing into a range of challenges, from new
education standards, significant disruption in ‘old world’ revenue models,
increasing costs of compliance and increased regulatory scrutiny. Count
Financial has historically operated at a loss and must move to a transparent
user pay revenue model that will return the business to a sustainable profit
and at the same time face into a number of these industry challenges.
Our objective is to align
the Count Financial
business alongside our
own values, our key
strategic drivers and
our worldview that
client best interest
is central to every
decision we make.
CountPlus Annual Report 2019 7
Our 100-day plan
We have established a 100-day plan for Count Financial and the CountPlus
business, to ensure we systematically address the key issues that need
attention as we move Count Financial out of a large bank environment
and into one created and led by financial advice experts who are passionate
about this industry.
The plan will focus on the same areas we emphasise as non-negotiable
in the CountPlus model: firms, people, focus, financial, and community.
That process will examine everything from client outcomes and retention,
through to building our community presence by continuing to work hard
with the Count Charitable Foundation in helping our network deliver support
for their communities.
By mid-January, that 100-day plan will be complete, and we will report again
on our progress along with our half-year results.
A new chapter, with more to do
Our shareholders voted overwhelmingly to support the Count Financial
acquisition, 99.79% voted in favour. The market confidence displayed
in the decision to acquire Count Financial is encouraging, but now the real
work begins. Cultural integration is critical for the success of any merger
and we have a well-defined process to transition the business to align with
CountPlus' values and client centric culture.
Importantly, we must also remain focused on the evolution of the CountPlus
business itself and are confident our new structure and ethos will continue
to drive our success and create value for our shareholders.
On a personal level, I am very excited about the future. We have achieved
solid results in the past two years, but the coming years will see us build
towards achieving our potential. I want to thank you for your continued
support, and I look forward to reporting back on our success throughout
the year.
Matthew Rowe
CEO & Managing Director
CountPlus Annual Report 2019 8 THE HARVARD EXPERIENCE
The Barry Lambert Scholarship
was introduced in 2017 and
provides funding for one member
of the CountPlus network to visit
Harvard Business School in
Boston for an intensive leadership
course. This year’s recipient,
Michael Beddoes from The MBA
Partnership on the Gold Coast,
found it an inspiring experience.
“The first thing is just being in that environment – the
wonderful campus and the history, combined with a
bitterly cold Boston winter, made it a very special time,”
Michael says. “It was a spectacular environment to be in.”
The week-long course – Leading Professional Services
Firms – drew nearly 100 participants from across the
world to study and stay on the Boston campus. Delegates
came from a wide spectrum of professional services
fields, including engineering, law, accounting and
financial services.
“It focused on people and knowledge-led businesses,”
Michael says. “While there were a great many areas studied,
perhaps the key message from the event was that the
most important thing is to retain and develop our people.”
It is an intense education event, featuring 20 lectures
spread over six days, focusing on 13 different case studies
that delegates examined before attending.
“The way you’re taught is the case-study method, where
we examined businesses and were asked for input as to
how we would have handled particular decisions that were
made in that business,” Michael explains. “The thing that
stands out is that these aren’t hypothetical scenarios; they
are based on real events, and backed up with an approach
that is firmly rooted in research. It is an academic approach
to analysing business operations.”
“What’s very apparent is the issues we face are the same
all over the world, and they are around managing staff,
meeting client objectives, delivering our service, and
dealing with technological change.”
Michael explains that the CountPlus opportunity is
particularly important because people with a technical
background don’t traditionally get significant exposure
to leadership training, and yet their reward for career
progression is to end up managing a team. Attending
Harvard put a renewed emphasis on how Michael can
develop his own in-house training schedule.
“The MBA Partnership has always had a strong focus
on in-house training, and the Harvard experience helped
re-emphasise the importance of ongoing education for
our team.”
“I was so inspired by what’s possible, but also frustrated
with how much time is wasted on low-value matters within
our business. Implementing the findings from the course
is about helping people step up – and me delegating more.”
The Harvard experience will help The MBA Partnership
leadership team direct resources more efficiently, allowing
the business to create more time for the most important
work – delivering for clients.
CountPlus Annual Report 2019 CASE STUDIES
COOPER REEVES
Being able to have the client
at the centre, and then working
out what your clients value,
is an important skill.
A new leadership standard
Cooper Reeves, Salisbury, QLD.
Given the transformation underway across the financial
services landscape, leadership has never been more
important particularly when it comes to the CountPlus
focus of putting the customer at the heart of the advice
equation. Finding the right people to lead may mean
looking beyond the core services a business offers.
“Leadership within the profession is about communication,
building trust, and inspiring people to come on a journey
with you into the future,” Managing Director of Cooper
Reeves, Christine Robinson, explains. “It’s no longer a
pre-requisite to be a financial planner or an accountant
to become a leader in this space.”
In fact, having people leading in a business who are not
deeply involved in the execution of the firm’s services
allows for that focus on the big picture, which is increasingly
important. Whether it is budgets or marketing or driving
the strategic objectives, being able to do so without being
bound by client management – instead directing resources
to focus on exceeding client expectations – can make
a difference.
“Finding the next generation of leaders can be challenging.
It’s difficult to teach someone to be a leader, because I
believe it comes from within. When you identify potential
within someone, you need to mentor, guide, and help them
grow into a leader,” Christine says.
She also reflects on the changing nature of an adviser-
client relationship, which has evolved beyond basic
service delivery like compliance into a more diverse and
comprehensive relationship.
“With the digital and regulatory disruption that we face,
it is even more essential that we build skills in the business
advisory space – it’s the way of the future.”
9
That view has changed the way Christine looks for people
to add to her team, as her business vision of providing a
holistic service to clients means that the approach toward
recruitment used even five years ago is not necessarily
applicable today.
“Being able to have the client at the centre, and then
working out what your clients value, is an important
skill. A client who is looking for business advisory
services may be looking for someone with more than
just accounting skills – someone who can facilitate
their thinking and lead them on a journey. The future
of leadership within the profession is so much more
than having technical ability and artificial intelligence –
it’s about creating self-awareness and the ability to
manage one’s self, being innovative and creative with
the ability to see the big picture.”
That transformation of the industry has its benefits –
particularly around how younger participants view
the world.
“We have the opportunity to tap into skills now that
we never had in years gone by, there’s a lot to be learnt
from the younger generation. This generation brings
a different skill set and have different aspirations. They
are keen to get in front of clients earlier, and by giving
them the opportunity to do this they can then attract
a different type of client from their own generation that
they can relate to, and this is good for the business.”
CountPlus is committed to finding and cultivating the
best leadership teams in the market and, through firms
like Cooper Reeves, will continue to develop its network
and foster an environment that allows leaders to rise.
CountPlus Annual Report 2019 10 BENTLEYS
Creating cultural alignment
Bentleys (WA), Perth.
A leadership change at Bentleys Perth – and the fostering
of a new culture that aligns with the key CountPlus values
and strategic drivers – illustrates how CountPlus focuses
on developing its network to achieve its potential.
Bentleys is recognised as a successful mid-tier brand
across Australia. CountPlus invested in the firm nine years
ago, and as part of the CountPlus strategic review of each
member firm, the decision was made in October 2017
to install a new leadership team to bring the Bentleys
purpose into alignment with the CountPlus vision. Chris
Nicoloff, who was already well known to the local business
community when he joined the business in 2015, was
elevated to Managing Principal. For him, the transition
to a new leadership model presented many challenges –
and opportunities.
The new strategic direction included “starting with a clean
sheet of paper”, the appointment of an Independent Chair
to the firm, and implementation of a new governance
structure.
“[CountPlus CEO] Matthew Rowe presents what he
expects from a member firm, but he’s also there for the
journey. There wasn’t a single time that he didn’t respond
to me quickly, which was really important at key times. The
appointment of Paul Burton as the independent Chairman
of Bentleys Perth represented further support from
CountPlus. Paul’s support and counsel in making decisions
and designing a new strategy has been invaluable.
“We have a brand new strategy for the business,
developed from scratch, and the values of the business
have been completely refreshed.”
“CountPlus has a very experienced team, but they will
let you run your own race. It’s really fantastic, and we
appreciate being left in control of running the business.
We recently had a strategic day to look at tweaking our
plan, and the feedback on the work we had done was
similarly positive. It gives us great confidence that we’re
operating the business as we should.”
Today, the Perth office has six principals, 45 team members
and four overseas support staff. While its immediate
financial performance reflects the complications of having
clients leave after a management change, the onboarding
of a raft of new clients has boosted confidence throughout
the business and let the leadership team know that the
future is bright. Lock-up has been reduced from 94 days
to 79 days, staff productivity has improved, staff turnover
is at best-practice levels, debt owed to CountPlus has fallen
by 33% and EBITA in 2019 grew by 54% over that achieved
in past years.
The Bentleys business has been a great example of what
is achievable in even the most challenging of restructures.
CountPlus Annual Report 2019 O'BRIEN
One of the most important
things we now have is that
extra layer of oversight over
our corporate strategy and
governance arrangements.
The choice for strategy
and oversight
O’Brien Accountants & Advisors, Ivanhoe, Victoria.
As one of the most recent investments by CountPlus,
the leadership team at O’Brien Accountants & Advisors
is perfectly placed to explain the benefits of joining
the network.
O’Brien Accountants & Advisors has been delivering
financial advice for almost 20 years. Its leadership team’s
understanding of how the landscape will change over
the next 20 years – and how important the accounting
profession will be in that future – led O’Brien to join
CountPlus in December.
“One of the most important things we now have is that
extra layer of oversight over our corporate strategy and
governance arrangements,” O’Brien Principal Chris Mullins
says. “It helps us create a long term strategic direction for
the business, and while we’ve always had a business plan,
having the two CountPlus directors on the Board ensures
we are achieving our goals.”
“We’re an advocate of having the independent chair on
the Board. Paul Burton has been fantastic, and it’s not
only at our quarterly board meetings we speak to him,
we have access to him all the time – and that’s invaluable.”
11
The strategic planning day that CountPlus implemented
as part of the onboarding process for O’Brien helped set
the scope for what was achievable.
“We had incredible experience in that room, and we
were able to test the boundaries of what was possible,”
Chris says.
When the time came for O’Brien’s leadership team to
decide on a new business path, a shared understanding
of what the future will look like made CountPlus the
business network to join.
“Our thinking and that of CountPlus CEO Matthew Rowe
really aligned,” Chris explains. “We had been offering
financial advice for 18 years and [co-owner] Mark [O’Brien]
and I recognised many years ago the role accountants
could play in understanding not only their clients’
accounting work but all of their financial needs.”
The experience so far has been rewarding and has created
a long term vision.
“The acquisition put liquidity around our equity in the
business, and allowed us to take some value off the table,”
Chris says. “Importantly, CountPlus operates a low-touch
approach: they leave you to do your work, because they
know that you know best when it comes to your business.”
CountPlus Annual Report 2019 12 COUNT CHARITABLE FOUNDATION
Count Charitable Foundation sets another record
The Count Charitable Foundation was set up by Joy and
Barry Lambert in 2004 with the objective of helping firms
within the Count Financial and CountPlus networks
realise their charitable goals and give back to their local
communities.
A total of 231 grants were issued to 170 recipients, with the
majority across the areas of community health and medical
research (41% of donations), community welfare (33%) and
education (13%).
The Foundation is an independent organisation,
generously supported by an annual donation from Count
Financial and regular donations from its members – more
than 100 businesses and individuals in the CountPlus and
Count Financial networks.
Members can apply for the Foundation to match their
fundraising initiatives dollar for dollar – and in some
instances more than that. The matching funds are
distributed directly to the causes the individual members
or firms nominate.
The focus on providing support for communities goes
beyond raising funds for good causes, firms also dedicate
time to delivering pro bono work for the communities in
which they operate. Last financial year, members of the
Count Financial and CountPlus networks provided more
than 14,000 hours of pro bono services, leading to real
social benefits.
The CountPlus network raised $209,423 for charity in the
past financial year, which the Count Charitable Foundation
boosted by $426,560, for a total of $635,983 in funds
distributed to good causes throughout the year. When
the Count Financial network is included, the total funds
distributed climbs to $1,376,983.
“The Count Charitable Foundation and its partnership with
Count Financial and CountPlus firms across Australia have
achieved yet another record in donations to charities this
year,” Count Charitable Foundation Director Peter Nicholson
says. “However, it is not just the financial donations that
I am so proud of but also the pro bono work that firms
provide, giving freely of their time and expertise to their
local communities.”
“The ability for individual team members in our member
firms to request dollar-matching donations from the
Foundation builds on the firm’s culture of supporting those
in the community less well off than themselves. There is
no doubt the work that goes into a fundraising activity for
the benefit of their local community builds a strong bond
between team members.”
CountPlus is excited that the return of the Count Financial
business to CountPlus will bring these two contributing
entities together under one roof once again, and we will
continue to build on the community work we do. The
merger will only strengthen the relationship between
the Count Charitable Foundation and the businesses and
individual members it assists.
CountPlus Annual Report 2019 CountPlus Annual Report 2019 14 FINANCIAL SUMMARY
Total revenue 1
Other income
Total operating expenses 2
EBITA before profit from associates
Share of profit from associates 3
Earnings before interest, tax and amortisation (EBITA) 4
Interest expense 5
Amortisation 6
Profit before tax
Income tax expense 7
Net (loss) / profit from operations after income tax 8
Profit / (loss) for the year from discontinued operations 9
Profit for the year
(Loss) / profit attributable to owners of CountPlus
Profit attributable to non-controlling interest
Basic and diluted (loss) / earnings per share (cents)
Current assets
Current liabilities
Current ratio
Non-current assets 10
Non-current liabilities 11
Net assets
Net (debt) / cash 12
2017
$'000
82,381
2,662
2018
$'000
74,386
3,300
2019
$'000
68,646
2,527
(81,481)
(73,369)
(66,434)
3,562
892
4,454
(1,157)
(2,728)
569
(769)
(200)
1,075
875
(106)
981
(0.10)
31,588
21,322
1.48
66,958
19,474
57,750
(5,294)
4,317
828
5,145
(463)
(2,070)
2,612
(300)
2,312
(1,465)
847
(176)
1,023
(0.16)
26,566
10,961
2.42
48,711
3,528
60,788
8,975
4,739
1,553
6,292
(342)
(1,440)
4,510
(1,554)
2,956
–
2,956
1,635
1,321
1.48
25,708
12,999
1.98
51,699
3,067
61,341
8,503
2018 / 2019
change
%
(8)
(23)
(9)
10
88
22
(26)
(30)
73
418
28
–
249
1,029
29
1,029
(3)
(19)
(18)
6
(13)
1
(5)
CountPlus Annual Report 2019 15
Notes to Financial Summary
1. Revenue
Revenue is generated from accounting services, financial
planning services and related services. Accounting related
revenue represents 74% of total revenue and was down
on the prior period by 7%. Financial planning revenue
makes up 21% of total revenue and was down 8%. Total
revenue was down on last year by 8% primarily due
to a change in the Total Financial Solutions fee model,
the sale of non-core business units in the prior year and
fee parcel sales.
6. Amortisation
Amortisation (non-cash) of $1.4M (2018: $2.1M) relates
to intangible assets, acquired client relationships and
adviser networks over their expected useful lives.
Income tax expense
7.
Income tax expense for FY19 is higher due to higher
profitability and the capital nature of acquisition costs
incurred in FY19.
2. Operating expenses
Total operating expenses are down 9% on the prior
period. This is due to the sale of non-core business units.
Corporate office expenses were higher by 26% due to
acquisition costs and in particular the Count Financial
acquisition.
3. Share of profit from associates
This item is made up of the Group’s share of profits
from five associates as disclosed in the notes to the
Financial Statements; namely One Hood Sweeney,
Hunter Financial and three newly acquired associates,
OBM Financial Services, Rundles CountPlus and Rundles
Financial Planning.
4. EBITA
EBITA increased by 22%. EBITA has increased due to
improved operating efficiency of underlying Partner
Firms and increased share of profits from associates.
Interest expense
5.
Interest expense decreased by 26% as a result of
a reduction in interest-bearing debt across the
underlying Partner firms.
8.
Net profit from operations after
income tax
Net profit after tax was $3.0M for the period. Profit
attributable to CountPlus shareholders was $1.6M.
Loss for the year from discontinued operations
9.
The loss on discontinued operations in the prior year
relates to the sale of the business unit Kidmans PEC
Pty Ltd, a non core business unit.
10. Non-current assets
Non-current assets increased 6% over the prior period due
to investments in associate firms mentioned in note 3.
11. Non-current liabilities
Non-current liabilities are down 13% over the prior period
due to a reduction in interest-bearing debt across the
underlying Partner firms.
12. Net cash
Net cash reduced by 6% over the prior period. Cash has
decreased due to acquisitions and dividends. This has been
countered by efficiencies in underlying Partner firms and
improved management of working capital management
with lock-up decreasing from 94 days in June 2018 to 82
days in June 2019.
CountPlus Annual Report 2019 16 COUNTPLUS BOARD
Ray Kellerman
Ray has over 30 years of experience in the financial services industry including
in the funds management, financial advisory, life insurance and corporate and
structured finance industries. Previous appointments include Independent
Chairman of ClearView Wealth, an ASX listed life insurance and financial services
company, and Independent Chairman of Credit Suisse Asset Management
Australia. Prior to this he was with Perpetual Trustees Australia for 10 years before
establishing his own financial services and compliance advisory business in 2001.
Ray is an owner and Executive Director of Quentin Ayers, an implemented
asset advisor specialising in alternative private market investments. He holds
qualifications in law, economics, investment securities and management.
Ray currently acts as a director for Goodman Funds Management Australia,
Foundation Life New Zealand and Ryder Capital. He is also active in a number of
governance related roles for some major fund managers operating in Australia.
Ray was appointed a Director of CountPlus in January 2017 and Chairman
in April 2017.
Alison Ledger
Alison has more than 30 years of experience in the financial services industry.
She has held senior operational and strategic roles in banking, funds
management and insurance with Chase, Bankers Trust and IAG. As a Partner
with McKinsey & Company, Alison advised leading global and Australian
banks on strategy, performance improvement and organisational change.
Alison’s more recent experience has been in digital transformation and
customer experience (CX). As Executive General Manager of Product, Pricing
and eBusiness, Alison ran IAG’s digital business and CX for the consumer
brands including NRMA, SGIO and SGIC.
Alison is Chair of CountPlus’ Remuneration and Nominations Committee and
a member of the Audit and Risk Committee. She is also a Non-Executive Director
of ASX listed Audinate Group Ltd. as well as private equity owned Latitude
Financial Services and Hallmark Insurance.
Alison holds a Bachelor of Arts (Hons) in Economics from Boston College
and an MBA from Harvard University. She is also a graduate of the Australian
Institute of Company Directors.
CountPlus Annual Report 2019 17
Kate Hill
Kate has over 20 years’ experience as an audit partner with Deloitte Touche
Tohmatsu, working with ASX listed and privately-owned clients. She has
worked extensively in regulated environments including assisting with Initial
Public Offerings, capital raising and general compliance, as well as operating
in an audit environment. She held a variety of leadership and executive roles in
Deloitte and served for a period on the Board of Partners of the Australian firm.
Kate Hill is an independent Non-executive Director, chair of the Audit and
Risk Committee and member of the Acquisitions Committee. She is also an
Independent Non-Executive Director of Elmo Software Limited (ASX:ELO) where
she serves as Chair of the Audit and Risk Committee, and is a member of the
Remuneration and Nominations Committee. She is Chair of Seeing Machines
Limited (AIM: SEE) and also Chair of the Audit and Risk Committee. She is the
Company Secretary of Kazia Therapeutics Limited (ASX:KZA, Nasdaq: KZIA).
Kate holds a Bachelor of Science (Hons) from Bristol University, is a member
of the Institute of Chartered Accountants in Australia and New Zealand, and
a graduate of the Australian Institute of Company Directors.
Andrew McGill
Andrew has more than 28 years’ financial markets experience, including
investment and management experience within the alternative asset sector
and the funds management industry generally. He was previously Managing
Director and CEO of ASX-listed Pacific Current Group Limited and in this capacity
also served on the Board of a number of affiliated companies. Prior to joining
Pacific Current Group, he was a founding partner of Crescent Capital Partners,
an independent mid-market private equity firm where he worked from 2000
to 2010. Earlier in his career, Andrew held executive roles within Macquarie
Bank’s Corporate Finance and Direct Investment teams. He was also a consultant
with The LEK Partnership, an international firm of business strategy consultants.
Andrew is currently a member of the Investment Committee for Besen Pty Ltd.
He also serves as a member of the Council of Kambala Girls School.
Andrew holds a Bachelor of Commerce and a Bachelor of Laws from the
University of New South Wales and a Graduate Diploma in Applied Finance
(FinSIA). He is also a Fellow of the Financial Services Institute of Australasia.
Matthew Rowe
Matthew Rowe is the former Managing Director of Hood Sweeney, the 30th
largest Accounting firm in Australia and twice a BRW top 10 fastest growing
firm. Matthew successfully managed his transition and succession from the
business to attend Harvard Business School. Matthew was also the longest
serving Chairman in the history of the Financial Planning Association of
Australia and represented Australia on the Global Standards Body.
In 2017, Matthew was appointed by the Minister for Revenue and Financial
Services to the Board of the Financial Adviser Standards and Ethics Authority
and served in this capacity for two and a half years.
Matthew brings to CountPlus a track record in leading a high performing
professional services organisation, strong corporate and regulatory experience,
as well as being recognised as a successful change agent within financial
services. Matthew was appointed a Director of CountPlus in October 2016
and CEO in February 2017.
CountPlus Annual Report 2019 CountPlus Annual Report 2019 DIRECTORS' REPORT
19
Name
Ray Kellerman
Alison Ledger
Kate Hill
Andrew McGill
Matthew Rowe
Laurent Toussaint
Narelle Wooden
Your Directors present their report on the consolidated entity consisting
of CountPlus Limited (‘Group’ or ‘CountPlus’) and the entities it controls,
for the financial year ended 30 June 2019.
Board of Directors and Company Secretary
The following persons were Directors and Company Secretaries of CountPlus
Limited during the financial year and up to the date of this report:
Position
Chairman
Independent Non-Executive Director
Independent Non-Executive Director
Independent Non-Executive Director
Date of Appointment
27 April 2017
1 October 2016
26 June 2017
4 December 2017
Executive Director / Chief Executive Officer / Managing Director
24 February 2017
Company Secretary
Company Secretary
29 June 2018
30 November 2018
Information on the current Directors including their experience, expertise
and other current directorships (including former directorships) of publicly
listed companies, is contained in the Board Profile Report on pages 16 to 17.
Meetings of Directors
The Board of Directors has an Audit and Risk Committee, an Acquisition
Committee and a Remuneration and Nominations Committee. The Members
acting on the Committees of the Board, the number of meetings held during
the year ended 30 June 2019, and the number of meetings attended by each
Director were:
Name
Directors’ Meetings
Audit and Risk
Committee
Acquisition
Committee
Remuneration
and Nominations
Committee
Position
Meetings
Attended Position
Meetings
Attended Position
Meetings
Attended Position
Meetings
Attended
Ray Kellerman
Non-Executive Chair
Alison Ledger
Non-Executive Director
Kate Hill
Non-Executive Director
Andrew McGill
Non-Executive Director
9/9
9/9
9/9
9/9
Member
Member
Chair
5/5
5/5
5/5
Attendee
Attendee
Member
Attendee
3/5
Chair
Matthew Rowe
Managing Director and CEO
9/9
Attendee
5/5
Member
1/6
1/6
6/6
6/6
6/6
4/4
4/4
Member
Chair
–
Member
4/4
Attendee
4/4
CountPlus Annual Report 2019 20
Principal Activities
The principal activities of the parent and its controlled entities (the Group)
in the course of the financial year were:
Î accounting, tax and audit services; and
Î
financial advice in relation to investment, superannuation and personal
insurance.
Review of Operations and Financial Results
The Directors of CountPlus Limited report a consolidated net profit after tax
of $2,956,000 for the year ending 30 June 2019.
The management team has been focussed on working with our Partner firms to
improve the key financial, cultural and strategic drivers and grow by acquisitive
activity which is reflected in the improved financial results for the year ending
30 June 2019.
Capital Management
Interest-bearing debt has decreased from $2,023,000 at 30 June 2018 to
$1,755,000 at 30 June 2019. CountPlus continues to focus on prudent capital
management by improving cashflows generated by Partner firms, paying
dividends from operating cashflows and investing in earnings accretive
acquisitions after undergoing a rigorous acquisition process.
Significant Changes in the State of Affairs
Significant changes in the state of affairs of the Group during the financial
year were as follows:
Î On 16 November 2018, CountPlus Limited purchased a 40% interest in
OBM Financial Services Pty Ltd for $1.164M. The transaction completed
on 30 November 2018;
Î On 20 February 2019, CountPlus Limited's wholly owned subsidiary 360
Financial Advantage Pty Ltd purchased the business of Kerry Albert & Co
for $1.205M. The transaction completed on 29 March 2019; and
Î On 30 April 2019, CountPlus Limited purchased a 40% interest in Rundles
Prime Pty Ltd and a 20% interest in Rundles Financial Planning Pty Ltd
for $2.481M. The transaction completed on 30 April 2019.
CountPlus Annual Report 2019 21
Dividends
Dividends of 2.0 cents per share were declared and 1.0 cent paid for the 2019
financial year as follows:
Financial Year Ended
Franking
2019
2019
Fully Franked
Fully Franked
Status
Paid
Declared
Cents Per Share
Payment Date
1.0 (per fully paid share)
17 April 2019
1.0 (per fully paid share)
16 October 2019
Matters Subsequent to the End of the
Financial Year
On 13 June 2019, CountPlus Limited, together with a special purpose subsidiary
of a discretionary trust established by CountPlus for benefit of Count member
firms (CMFT), entered into an agreement to acquire Count Financial Limited
(Count Financial). CountPlus will hold 85% and CMFT will hold 15% of Count
Financial. The transaction was approved by shareholders on 6 August 2019 and
will complete on 1 October 2019, which will be the date on which CountPlus
obtains control of Count Financial.
No other matter or circumstance has arisen since 30 June 2019 that has
significantly affected, or may significantly affect:
(a)
the consolidated entity's operations in future financial year;
(b)
the results of those operations in future financial year; or
(c)
the consolidated entity's state of affairs in future financial year.
The details for the full year final dividend for FY19 are disclosed in note 31.
Likely Developments, Business Strategies
and Prospects
A letter has been sent to shareholders providing a report into the operational
and strategic initiatives being driven by the Group. We are continuing to build
the capacity to undertake merger and acquisition opportunities at a time
of unprecedented change in our core business segments.
Our Core Business
The Group’s core business is Accounting, Business Advisory and Financial
Planning services. The Group will continue to align, build, and grow its core
business through organic and acquisitive growth.
CountPlus Annual Report 2019 22
Material Business Risks
The main risks for the Group are classified into two categories, operational and
legislative. Group risks are regularly assessed by the Board and the Board’s Audit
and Risk Committee. Risks are addressed in an appropriate manner and are
reflected through changes in Group policies as required.
Operational Risk
The main operational risk for our Partner firms relates to potential loss of
clients, working capital management and staff costs which may be triggered
by either senior team departures or declining service levels. Partner firms have
regular board and management meetings in which the performance of the
firm and forecasts are analysed. Any operational issues are also addressed at
those meetings. Partner Firm Principals are subject to restraint clauses as part
of their employment contracts. In addition, all Partner firms have succession
plans in place.
Training and compliance monitoring have been implemented to ensure
standards are being met.
A further operational risk relates to inappropriate or inadequate client advice.
Regarding the acquisition of Count Financial, which will complete on 1 October
2019, the Commonwealth Bank of Australia has provided a $200 million
indemnity to cover remediation of past conduct. All firms are required to have
quality assurance processes and appropriate professional indemnity insurance
either directly or as part of the Group policy. Partner firms who are part of
the Count Financial dealer are covered under Count Financial's professional
indemnity insurance arrangements for their financial planning services.
Legislative Risk
In terms of legislative risk, any substantive changes that impact the provision
of accounting/tax services or financial planning services, could have a material
impact on the Group. For accounting/tax related services, initiatives being
considered by the Federal Government to further reduce the requirement for
individuals to lodge tax returns may have some impact on the compliance-
based work for some Partner firms.
Legislative risk is not currently expected to significantly impact the profitability
of accounting-based Partner firms and the Group, but it will continue to be
closely monitored by the Board’s Audit and Risk Committee.
In addition to the two main risk categories, the following are some of the
additional risks assessed by the Board:
Î
Integration risk: risk relating to the successful integration of newly acquired
Partner firms;
Î Expense management: failure to control expenses such as staff costs would
result in earnings for CountPlus not reflecting revenue performance by
Partner firms; and
Î Owner, Driver – Partner model: the timing and implementation of this
initiative will be subject to the underlying performance of the participating
firms against key performance indicators.
CountPlus Annual Report 2019 CountPlus Annual Report 2019 24 REMUNERATION REPORT (AUDITED)
This report outlines the remuneration arrangements in place for the Group’s
Directors and Executives in accordance with requirements of the Corporations
Act 2001 (the Act) and its regulations. This section of the Directors’ Report has
been audited by the Group’s external auditors, Grant Thornton as required
by section 308(3C) of the Act.
Remuneration and Nominations Committee
The Remuneration and Nominations Committee of the Board of Directors of
CountPlus Limited is responsible for determining and reviewing remuneration
arrangements for the Directors and CountPlus executives.
The Committee’s purpose is to:
Î Make recommendations to the Board of Directors in relation to the
remuneration of Executive and Non-Executive Directors;
Î Review and approve CEO and Senior Management remuneration policy
for CountPlus; and
Î Evaluate potential candidates for Executive positions, oversee the
development of Executive succession plans and evaluate potential
candidates for Non-Executive Director positions.
Any decision made by the Committee concerning an individual Executive’s
remuneration is made without the Executive being present at the meeting.
The Remuneration and Nominations Committee commissioned services from
two consultants, Richard Altman Consulting and Guerdon Associates Pty Ltd,
during the financial year. CountPlus paid $75,000 for these services. Richard
Altman Consulting and Guerdon Associates Pty Ltd have confirmed that any
remuneration recommendations have been made free of undue influence
by members of the Group’s Key Management Personnel.
Voting and comments made at the Group’s
2018 Annual General Meeting
At the 2018 AGM, 97.28% of the votes received supported the adoption of
the remuneration report for the year ended 30 June 2018. It is noted that only
1.73% of all securities voted against the adoption of the remuneration report.
CountPlus Annual Report 2019 25
The Group has
structured an Executive
remuneration
framework that is
market competitive and
complementary to the
reward strategy of the
organisation.
Remuneration Policy
Remuneration arrangements are based on an assessment of the
appropriateness of the nature and amount of emoluments of the Directors
and other Key Management Personnel, with the overall objective of ensuring
maximum stakeholder benefit from the retention of a high-quality Board
and Executive team.
The objective of the Group’s Executive reward framework is to ensure reward
for performance is competitive and appropriate for the results delivered.
The Board ensures that Executive reward satisfies the following key criteria
for reward governance practices:
Î competitiveness and reasonableness;
Î acceptability to shareholders; and
Î performance linkage/alignment of executive compensation.
The Group has structured an Executive remuneration framework that is market
competitive and complementary to the reward strategy of the organisation.
To assist in achieving these objectives, the Remuneration and Nominations
Committee links the nature and amount of Executive Directors’ and Officers’
remuneration to the Group’s financial and operational performance.
Remuneration Structure
The Board has established a Remuneration and Nominations Committee which
provides advice on remuneration and incentive policies and practices and specific
recommendations on remuneration packages and other terms of employment
for the CEO, other senior executives and Non-Executive Directors.
Non-Executive Directors
The Board seeks to set aggregate remuneration at a level which provides
CountPlus with the ability to attract and retain Non-Executive Directors
of a high calibre, whilst incurring a cost which is acceptable to shareholders.
The ASX Listing Rules specify that any increase in the total aggregate
remuneration of Non-Executive Directors shall be determined by a general
meeting. Any increase in aggregate remuneration will be put to shareholders
for approval.
CountPlus Annual Report 2019 26
Group Executives
The main principle underlying the Group’s employee remuneration policy
is to ensure rewards are commensurate with the Group’s objectives and the
results delivered.
The executive remuneration framework has four components:
Î Base pay;
Î Short term incentives;
Î Long term incentives; and
Î Other remuneration such as superannuation and long service leave.
Refer to pages 28 and 29 for a detailed breakdown of the remuneration
components.
Specifically, this is achieved by ensuring:
Î Remuneration reflects each employee’s position and responsibilities within
the Group;
Î The interests of all employees are aligned with those of shareholders;
Î Rewards are linked with the strategic goals and performance of the Group;
and
Î Total remuneration is competitive by market standards.
Contractual Arrangements
Non-Executive and Executive Directors
Non-Executive Directors do not have fixed-term contracts with the Group.
On appointment to the Board, all Non-Executive Directors enter into a
service agreement with the Group in the form of a letter of appointment.
The letter summarises the Board policies and terms, including compensation.
Remuneration and other terms of employment for Group Executives are
also formalised in employment contracts. Each of these agreements provide
for the provision of performance related cash bonuses and other benefits
(which may include car allowances, car parking and participation in any equity
scheme). Other major provisions of the agreements relating to remuneration
are set out below.
The CEO and Managing Director Matthew Rowe commenced his employment
contract on 24 February 2017. Mr Rowe’s appointment is for a five-year period.
Either party has the right to give notice per the terms of the employment
agreement during the period.
Mr Rowe currently has an annual base salary of $410,000 plus superannuation
and has a short term incentive up to 100% of his base salary commencing
1 July 2018 and assessed to 30 June 2019. Key performance metrics are set by
the CountPlus Board and performance is assessed by the Board in its absolute
discretion against these metrics.
Where Mr Rowe is eligible for payment of a short term incentive, payment
is as follows:
Î 2/3rd cash payment within 30 days of the approval date;
Î 1/6th cash payment 12 months from the approval date; and
Î
the remaining 1/6th cash payment 24 months from the approval date.
CountPlus Annual Report 2019 27
Key Management Personnel
Remuneration and other terms of employment for the Executive Director
and other Key Management Personnel are formalised in a service agreement.
The major provisions of the agreements are set out below:
Employee
Base salary*
Term of agreement
Notice period
Matthew Rowe
Laurent Toussaint
410,000
299,951
Five years
Six months
Unspecified
Three months
Graham McGeagh
279,469
Unspecified
Three months
Narelle Wooden
279,469
Unspecified
Three months
* Excluding superannuation based on FY19 salaries. Refer to pages 28 and 29
for a detailed breakdown of the remuneration components.
Long Term incentive
Subject to both shareholder approval at the relevant Annual General Meeting
held in or around November each year and the absolute discretion of the Board,
on an annual basis, Mr Rowe may be granted a specific number of Performance
Rights for shares in the Group. The other Key Management Personnel at the
absolute discretion of the Board may also be granted Performance Rights for
shares in the Group. Performance Rights are an entitlement to be allocated
a share in CountPlus at a future time, subject to the satisfaction of various
performance and employment hurdles set out on pages 31 to 33 of this report.
Group Performance and the Link to
Remuneration
The Group’s remuneration policy aims to achieve a link between the
remuneration received by Key Management Personnel and the creation of
shareholder wealth. This is attained via the inclusion of an ROE and EPS growth
target via the long term incentive scheme for the Key Management Personnel.
CountPlus Annual Report 2019 28
Remuneration of Key Management Personnel
Details of the remuneration of the Directors and other Key Management
Personnel of the Group (as defined in AASB 124 Related Party Disclosures)
are set out below.
Short Term
Employee Benefits
Post
Employment
Benefits
Other
Long Term
Benefits
Salary
and Fees
Bonus
Other
Superannuation Long Service
2019
$
$
$
$
Non-Executive Directors
Ray Kellerman
Alison Ledger
Kate Hill
Andrew McGill
Executive Director
Matthew Rowe
Chief Executive Officer
91,324
65,000
65,000
65,000
–
–
–
–
–
–
–
–
8,676
6,175
6,175
6,175
423,950 272,650
–
20,531
Key Management Personnel
Laurent Toussaint
Chief Financial Officer
Graham McGeagh 1
Chief Operating Officer
Narelle Wooden 2
General Counsel
Mark Chapman 3
Chief Operating Officer
299,951
64,097
203,833
60,000
173,314
30,000
65,827
–
Total
1,453,199 426,747
–
–
–
–
–
20,531
15,399
13,456
5,653
102,771
Termination
Benefits
Share Based
Payment
Termination
Benefits
Performance
Rights
$
$
% of
Variable
Remuneration
Total
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
100,000
71,175
71,175
71,175
0%
0%
0%
0%
8,937
726,068
39%
18%
23%
15%
0%
6,538
391,117
6,127
285,359
3,051
219,821
–
71,480
24,653 2,007,370
Leave*
$
–
–
–
–
–
–
–
–
–
–
* This amount reflects the expense recognised in the financial statements in accordance with the Corporations Regulation
and not the amount that is owing to these directors.
1 Graham McGeagh was appointed as Chief Operating Officer on 1 October 2018.
2 Narelle Wooden was appointed as General Counsel on 19 November 2018 and
Company Secretary on 30 November 2018.
3 Mark Chapman resigned as Chief Operating Officer on 8 October 2018.
The elements of remuneration have been determined on the basis of the cost
to the parent and the consolidated entity.
CountPlus Annual Report 2019 29
Termination
Benefits
Share Based
Payment
Termination
Benefits
Performance
Rights
$
$
% of
Variable
Remuneration
Total
$
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
71,175
41,062
17,794
71,175
17,794
100,000
0%
0%
0%
0%
0%
0%
13,694
724,902
39%
–
–
–
153,159
19,293
0%
0%
168,685
15%
13,694 1,385,039
Short Term
Employee Benefits
Post
Employment
Benefits
Other
Long Term
Benefits
Salary
and Fees
Bonus
Other
Superannuation Long Service
2018
$
$
$
$
Leave*
$
–
–
–
–
–
–
65,000
37,500
16,250
65,000
16,250
91,324
–
–
–
–
–
–
–
–
–
–
–
–
6,175
3,562
1,544
6,175
1,544
8,676
Non-Executive Directors
Alison Ledger
Andrew McGill
Barry Lambert 1
Kate Hill
Graeme Fowler 2
Ray Kellerman
Executive Director
Matthew Rowe
Chief Executive Officer
423,950 266,500
–
20,049
709
Key Management Personnel
John Collier 3
Chief Financial Officer
Mark Chapman 4
Chief Operating Officer
Laurent Toussaint 5
Chief Financial Officer
143,983
17,456
–
–
134,209
25,000
Total
1,010,922 291,500
–
–
–
–
9,176
1,658
9,230
–
179
246
67,789
1,134
1 Barry Lambert retired as a Director on 30 September 2017.
2 Graeme Fowler retired as a Director on 30 September 2017.
3 John Collier retired as Chief Financial Officer on 29 November 2017.
4 Mark Chapman was appointed as Chief Operating Officer on 4 June 2018.
5 Laurent Toussaint was appointed as Chief Financial Officer on 22 January 2018.
CountPlus Annual Report 2019 30
Directors
Ray Kellerman
Alison Ledger
Kate Hill
Andrew McGill
Matthew Rowe
Other Key Management Personnel
Laurent Toussaint
Graham McGeagh
Shares held by Key Management Personnel
The relevant interests held during the year of the Directors and other Key
Management Personnel in the shares of CountPlus Limited, as notified to the
Australian Securities Exchange in accordance with the Corporations Act 2001
(Cth), are:
Disclosures relating to shares:
Balance at the
start of the year
Granted as remuneration
during the year
Purchased during
the year
Forfeited
Disposed
Balance at the end
of the year
750,000
–
100,000
–
707,777
20,000
8,330
–
–
–
–
–
–
–
–
10,000
–
10,000
176,345
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
750,000
10,000
100,000
10,000
884,122
20,000
8,330
No other Key Management Personnel hold CountPlus shares.
Equity plans
The Group operates three equity plans for employees. A loan funded share
plan, an employee loyalty equity plan, and a long term incentive plan. One
of these equity plans include Key Management Personnel, this is the long term
incentive plan.
CountPlus Annual Report 2019 31
Long Term Incentive Plan
Performance Rights are issued by the Group to the Chief Executive Officer and
other Key Management Personnel under its long term incentive plan.
See below summary of long term incentive plan rights issued:
Participant
Matthew Rowe
Laurent Toussaint
Graham McGeagh
Narelle Wooden
Total
Year
2018
2017
2018
2017
2018
2017
2018
2017
Rights granted
140,182
134,693
274,875
102,555
–
102,555
96,110
–
96,110
47,859
–
47,859
521,399
2018 Long Term Incentive Plan
The performance rights vest over four years on achievement of service conditions
and company specific performance conditions and is split evenly between two
tranches. Based on the 2018 long term incentive award approved at the Annual
General Meeting on 19 November 2018, Matthew Rowe and the other Key
Management Personnel have been granted the following Performance Rights:
Description
Participant
Grant date
Expiry date
2018 LTI award
Matthew Rowe
19 November 2018
20 December 2022
2018 LTI award
Laurent Toussaint
19 November 2018
20 December 2022
2018 LTI award
Graham McGeagh
19 November 2018
20 December 2022
2018 LTI award
Narelle Wooden
19 November 2018
20 December 2022
Granted
during
the year
140,182
102,555
96,110
47,859
Exercised
Forfeited
–
–
–
–
–
–
–
–
Balance
at end of
the year
140,182
102,555
96,110
47,859
CountPlus Annual Report 2019 32
The performance conditions for tranche 1 are as follows:
Tranche 1 Performance Rights will vest if the Group’s earnings per share (EPS)
achieves a diluted compound earnings growth rate from 10% and equal to or
greater than 12.5% per annum over four consecutive financial years commencing
on 1 July 2018 (Diluted EPS Growth) as illustrated in the table below:
Diluted EPS Growth
< 10% p.a.
= or > 10% p.a.
> 12.5% p.a.
% of Performance Rights in Diluted EPS
Tranche that will vest
0%
20%
100%
The performance conditions for tranche 2 are as follows:
Tranche 2 Performance Rights will vest if the Group’s return on equity (ROE)
is from 9% and equal to or greater than 15% per annum over four consecutive
financial years commencing on 1 July 2018 (Average ROE) as illustrated in the
table below:
Average ROE
< 9% p.a.
= or > 9% p.a.
> 15% p.a.
% of Performance Rights in ROE Tranche
that will vest
0%
10%
100%
When EPS of 10% to 12.5% or more is generated, tranche 1 vests on
a straight-line basis between 20% and 100%.
When ROE of 9% to 15% or more is generated, tranche 2 vests on
a straight-line basis between 10% and 100%.
2017 Long Term Incentive Plan
The performance rights vest over three years on achievement of service
conditions and company specific performance conditions and is split evenly
over two tranches. Based on the 2017 long term incentive award approved
at the Annual General Meeting on 23 November 2017, Matthew Rowe has
been granted the following Performance Rights:
Description
Participant
Grant date
Expiry date
Granted
during
the year
Exercised
Forfeited
Balance
at end of
the year
2017 LTI award
Matthew Rowe
23 November 2017
22 November 2020
134,693
–
–
134,693
CountPlus Annual Report 2019 33
The performance conditions for tranche 1 are as follows:
Tranche 1 Performance Rights will vest if the Group’s earnings per share (EPS)
achieves a diluted compound earnings growth rate from 10% and equal
to or greater than 12.5% per annum over three consecutive financial years
commencing on 1 July 2017 (Diluted EPS Growth) as illustrated in the
table below:
Diluted EPS Growth
< 10% p.a.
= or > 10% p.a.
> 12.5% p.a.
% of Performance Rights in Diluted EPS
Tranche that will vest
0%
20%
100%
The performance conditions for tranche 2 are as follows:
Tranche 2 Performance Rights will vest if the Group’s return on equity (ROE) is
from 12% and equal to or greater than 15% per annum over three consecutive
financial years commencing on 1 July 2017 (Average ROE) as illustrated in the
table below:
Average ROE
< 12% p.a.
= or > 12% p.a.
> 15% p.a.
% of Performance Rights in ROE Tranche
that will vest
0%
20%
100%
Both tranches vest on a straight-line basis between 20% and 100%.
Other transactions with Key Management
Personnel
Managing Director and CEO Matthew Rowe is a Director and Investor in
My Accounts Bookkeeping (My Accounts). In FY19 CountPlus used the services
of My Accounts for which it paid $36,870 (excluding GST). CountPlus’ 100%
owned subsidiary CountPlus One Pty Ltd paid $29,059 (excluding GST) in fees
and disbursements to My Accounts. Mr Rowe did not participate or bear any
kind of influence in decisions relating to transactions with My Accounts.
There are no other transactions which involved the Key Management Personnel
during the financial year 2019.
End of audited Remuneration Report.
CountPlus Annual Report 2019 34
Indemnification and Insurance of Directors,
Officers and Auditors
During the financial year, the Group paid premiums in respect of a contract
insuring all the Directors and Officers of the Group against any claims and
wrongful acts arising out of their conduct while acting in their capacity as
Director or Officer of the Group. All Directors’ and Officers’ liability policies
contain a Confidentiality Condition, which restricts the insured from disclosing
certain information regarding this insurance. The Group has not otherwise,
during or since the end of the financial year, except to the extent permitted
by law, indemnified or agreed to indemnify any current or former officer or
auditor of the Group against a liability incurred as such by an officer or auditor.
Environmental Regulation
The Group is not regulated by any significant environmental regulations under
the Laws of the Commonwealth, State or Territory.
Non-Audit Services
In addition to providing external audit services, the auditors, Grant Thornton,
provided non-audit services during the year under review. Details of the
services rendered are set out in note 25.
The Board of Directors has considered the position and, in accordance with
advice received from the audit committee, is satisfied that the provision of the
non-audit services is compatible with the general standard of independence
for auditors imposed by the Corporations Act 2001. The directors are satisfied
that the provision of non-audit services by the auditor, as set out below, did
not compromise the auditor's independence requirements of the Corporations
Act 2001 for the following reasons:
Î all non-audit services have been reviewed by the audit committee to ensure
they do not impact the impartiality and objectivity of the auditor; and
Î none of the services undermine the general principles relating to auditor
independence as set out in APES 110 Code of Ethics for Professional
Accountants.
CountPlus Annual Report 2019 35
Auditor's Independence Declaration
A copy of the auditor's independence declaration as required under section
307C of the Corporations Act 2001 (Cth) is on page 36.
Rounding of amounts
In accordance with ASIC Corporations (Rounding in Financial/Directors' Reports)
Instrument 2016/191, amounts in the financial report are rounded off to the
nearest thousand Australian dollars unless otherwise indicated.
Corporate Governance Statement
The Group’s Directors and management are committed to conducting the
business of the Group in an ethical manner. The Group has adopted and
has substantially complied with the ASX Corporate Governance Principles
and Recommendations (Third Edition) (Recommendations) to the extent
appropriate to the size and nature of the Group’s operations. The Group has
prepared a statement which sets out the corporate governance practices that
were in operation throughout the financial year for the Group, identifies any
Recommendations that have not been followed, and provides reasons for
not following such Recommendations (Corporate Governance Statement).
In accordance with ASX Listing Rules 4.7.4 and 4.10.3, the Corporate Governance
Statement will be available for review on CountPlus’ website (www.countplus.
com.au) and will be lodged together with an Appendix 4G with ASX while
this Annual Report is lodged with ASX. The Appendix 4G will identify each
Recommendation that needs to be reported against by CountPlus and will
provide shareholders with information as to where relevant governance
disclosures can be found. The Group’s corporate governance policies and
charters and policies are all available on CountPlus’ website.
This report is made in accordance with a resolution of the Directors.
Ray Kellerman
Chairman
Sydney
6 September 2019
CountPlus Annual Report 2019 36 AUDITOR'S INDEPENDENCE DECLARATION
Level 17, 383 Kent Street
Sydney NSW 2000
Correspondence to:
Locked Bag Q800
QVB Post Office
Sydney NSW 1230
T +61 2 8297 2400
F +61 2 9299 4445
E info.nsw@au.gt.com
W www.grantthornton.com.au
Auditor’s Independence Declaration
To the Directors of CountPlus Limited
In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of CountPlus
Limited for the year ended 30 June 2019, I declare that, to the best of my knowledge and belief, there have been:
a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b no contraventions of any applicable code of professional conduct in relation to the audit.
Grant Thornton Audit Pty Ltd
Chartered Accountants
C F Farley
Partner – Audit & Assurance
Sydney, 6 September 2019
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
CountPlus Annual Report 2019
CountPlus Annual Report 2019 FINANCIAL STATEMENTS
CONTENTS
Financial Statements 2019
Corporate Directory
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
Consolidated Statement of Financial Position
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated Financial Statements
Directors' Declaration
Independent Auditor’s Report
39
40
41
42
43
44
45
93
94
CountPlus Annual Report 2019 40
Corporate Directory
DIRECTORS
Raymond Kellerman
Independent Non-Executive Director
Appointed 16 January 2017
Chairman
Appointed 27 April 2017
Alison Ledger
Independent Non-Executive Director
Appointed 1 October 2016
Kate Hill
Independent Non-Executive Director
Appointed 26 June 2017
Andrew McGill
Independent Non-Executive Director
Appointed 4 December 2017
Matthew Rowe
Independent Non-Executive Director
Appointed 1 October 2016
Managing Director and Chief Executive Officer
Appointed 24 February 2017
SOLICITORS
CHIEF FINANCIAL
OFFICER
Laurent Toussaint
Appointed 22 January 2018
COMPANY SECRETARY
REGISTERED OFFICE
AND PRINCIPAL
PLACE OF BUSINESS
SHARE REGISTRY
INDEPENDENT
AUDITORS
Laurent Toussaint
Appointed 29 June 2018
Narelle Wooden
Appointed 30 November 2018
Level 17, Suite 2
1 Margaret Street
Sydney NSW 2000
Telephone +61 2 8488 4500
Computershare Investor
Services Pty Ltd
Level 3, 60 Carrington Street
Sydney NSW 2000
Telephone 1300 855 080
Facsimile
+61 2 8234 5000
+61 2 8234 5050
Grant Thornton
Level 17, 383 Kent Street
Sydney NSW 2000
Telephone +61 2 8297 2400
Thomson Geer Lawyers
Level 25, 1 O’Connell Street
Sydney NSW 2000
Telephone +61 2 8248 5400
BANKERS
Westpac Banking Corporation
STOCK EXCHANGE
LISTINGS
CountPlus Limited shares
are listed on the Australian
Securities Exchange (ASX)
WEBSITE ADDRESS
www.countplus.com.au
ABN
11 126 990 832
CountPlus Annual Report 2019
Consolidated Statement of Profit or Loss
and Other Comprehensive Income
For the Year Ended 30 June 2019
Revenue from operating activities
Other income
Gain on deferred consideration adjustment
Gain on disposal of investments, business units and subsidiaries
Interest income
Other income
Total other income
Salaries and employee benefits expense
Amortisation expense
Depreciation expense
Premises expenses
Acquisition related expenses
Share based payment expense
Impairment of intangible assets
Reversal of impairment / (impairment) of receivables
Fair value loss on investments
Finance costs
Other operating expenses
Total expenses
Share of net profit of associates accounted for using equity method
Profit from operations before income tax
Income tax expense
Net profit from operations after income tax
Loss for the year from discontinued operations
Profit for the year
Other comprehensive income, net of income tax
Other comprehensive income, net of income tax
Other comprehensive income for the year, net of income tax
Total comprehensive income for the year, net of income tax
Net profit / (loss) attributable to:
Owners of CountPlus Limited
Non-controlling interests
Total comprehensive income / (loss) for the year is attributable to:
Owners of CountPlus Limited
Non-controlling interests
Basic and diluted earnings / (loss) per share
From continuing operations attributable to the ordinary owners of the Group
From discontinued operations
Total basic and diluted loss per share attributable to the owners of the Group
41
2018
$’000
74,386
271
2,258
53
718
3,300
(52,207)
(2,070)
(842)
(4,494)
(36)
(60)
(4,700)
(333)
(2)
(463)
(10,695)
(75,902)
828
2,612
(300)
2,312
(1,465)
847
–
–
847
(176)
1,023
847
(176)
1,023
847
Cents
1.17
(1.33)
(0.16)
Note
3,4
4
5
13
5
14
6
22
33
33
33
2019
$’000
68,646
–
1,000
75
1,452
2,527
(47,706)
(1,440)
(847)
(4,324)
(1,840)
8
(1,060)
103
–
(342)
(10,768)
(68,216)
1,553
4,510
(1,554)
2,956
–
2,956
–
–
2,956
1,635
1,321
2,956
1,635
1,321
2,956
Cents
1.48
–
1.48
The above Consolidated Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes.
CountPlus Annual Report 2019 42
Consolidated Statement of Financial Position
As at 30 June 2019
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Trade and other receivables
Loans and advances
Contract assets
Current tax receivable
TOTAL CURRENT ASSETS
NON-CURRENT ASSETS
Loans and other receivables
Investments in associates
Deferred tax assets
Property, plant and equipment
Intangible assets
TOTAL NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Trade and other payables
Interest bearing loans and borrowings
Current tax liabilities
Provisions
Contract liabilities
Other current liabilities
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Other payables
Interest bearing loans and borrowings
Provisions
Other non-current liabilities
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Contributed equity
Reserves
Accumulated losses
Capital and reserves attributable to owners of CountPlus Limited
Non-controlling interests
TOTAL EQUITY
Note
7
8
9
10
11
8
14
11
12
13
15
16
11
18
17
17
15
16
18
17
19
20
21
23
2019
$’000
10,258
11,909
19
3,522
–
25,708
672
13,607
550
3,697
33,173
51,699
77,407
5,785
527
336
5,052
916
383
12,999
108
1,228
1,130
601
3,067
16,066
61,341
121,583
(47,062)
(19,412)
55,109
6,232
61,341
2018
$’000
10,998
10,964
205
4,340
59
26,566
1,300
9,088
390
3,705
34,228
48,711
75,277
5,114
173
–
4,719
487
468
10,961
75
1,850
1,019
584
3,528
14,489
60,788
121,583
(51,363)
(15,439)
54,781
6,007
60,788
The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
CountPlus Annual Report 2019
Consolidated Statement of Changes in Equity
For the Year Ended 30 June 2019
43
Issued
Capital
$’000
Treasury
Shares*
$’000
Accumulated
Losses
$’000
Note
Share Based
Payment
Reserve
$’000
Acquisition
Reserve
$’000
Non-controlling
interests (NCI)
$’000
Total
$’000
Total
$’000
Balance at 1 July 2018
Profit for the year
Other comprehensive income
Total comprehensive income
for the year
Transactions with non controlling
interests (NCI)
23
Share based payments for long
term incentives (LTI)
Transfer to accumulated losses^
Dividends provided for or paid**
21
23,24
126,566
(4,983)
(15,439)
1,494
(52,857)
54,781
6,007
60,788
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,635
–
1,635
–
–
(3,350)
(2,258)
–
–
–
–
(8)
–
–
–
–
–
–
–
1,635
–
1,635
–
(8)
4,309
959
1,321
–
1,321
2,956
–
2,956
(161)
(161)
–
–
(8)
959
–
(2,258)
(935)
(3,193)
Balance at 30 June 2019
126,566
(4,983)
(19,412)
1,486
(48,548)
55,109
6,232
61,341
Issued
Capital
$’000
Treasury
Shares*
$’000
Accumulated
Losses
$’000
Note
Share Based
Payment
Reserve
$’000
Acquisition
Reserve
$’000
Non-controlling
interests (NCI)
$’000
Total
$’000
126,566
(4,983)
(2,955)
1,434
(66,000)
54,062
Balance at 1 July 2017
(Loss) / Profit for the year
Other comprehensive income
Total comprehensive income
for the year
Transactions with non controlling
interests (NCI)
23
Share based payments for loan
funded share plan (LFSP)*
Share based payments for long
term incentives (LTI)
Transfer to accumulated losses^
Dividends provided for or paid**
21
23,24
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(176)
–
(176)
–
–
–
(12,308)
–
–
–
–
–
46
14
–
–
Total
$’000
57,750
847
–
847
3,688
1,023
–
1,023
–
–
–
(176)
–
(176)
835
835
1,961
2,796
–
–
12,308
–
46
14
–
–
–
–
46
14
–
(665)
–
(665)
Balance at 30 June 2018
126,566
(4,983)
(15,439)
1,494
(52,857)
54,781
6,007
60,788
The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
*
The Company has formed a trust to administer a Loan Funded Share Plan. Shares held by the trust are disclosed as Treasury Shares and
deducted from contributed equity.
** This amount includes the dividends applied to the Loan Funded Share Plan.
^
Transfer of Acquisition Reserve to Accumulated Losses for firms disposed.
CountPlus Annual Report 2019 44
Consolidated Statement of Cash Flows
For the Year Ended 30 June 2019
Note
32
22
14
17
CASH FLOWS FROM OPERATING ACTIVITIES:
Receipts from customers (inclusive of goods and services tax)
Payments to suppliers and employees (inclusive of goods and services tax)
Interest received
Interest paid
Income taxes paid
Net cash from continuing operating activities
Net cash from discontinued operating activities
Net cash inflow from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of property, plant and equipment and business units
Proceeds from sales under the Owner, Driver – Partner model
Proceeds from sale of shares in Class Limited
Proceeds from sale of Kidmans PEC Pty Ltd
Proceeds from sale of subsidiaries, business units and associates
Purchase of property, plant and equipment
Payment for acquisition of subsidiaries / business assets
Payment for acquisition of associates
Income taxes paid on the sale of shares in Class Limited
Dividends / distributions received from associates
Payment of deferred consideration on acquisition of controlled entities and associates
Net cash from continuing investing activities
Net cash from discontinued investing activities
Net cash (outflow) / inflow from investing activities
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings
Repayment of borrowings
Proceeds of borrowings / hire purchase and lease liabilities
Payment of dividends to equity holders
Payment of dividends by controlled subsidiaries to non-controlling interests
Net cash from continuing financing activities
Net cash from discontinued financing activities
Net cash outflow from financing activities
Net (decrease) / increase in cash and cash equivalents held
Cash and cash equivalents at beginning of financial year
Included in disposal group
Cash and cash equivalents at end of financial year
7
The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
2019
$’000
109,477
(101,810)
7,667
75
(342)
(1,451)
5,949
–
5,949
1,169
–
–
–
–
(957)
(919)
(3,722)
–
757
(370)
(4,042)
–
(4,042)
1,168
(622)
–
(2,258)
(935)
(2,647)
–
(2,647)
(740)
10,998
–
10,258
2018
$’000
120,468
(113,734)
6,734
53
(463)
(1,271)
5,053
(259)
4,794
294
3,447
3,385
3,445
5,983
(493)
(750)
–
(3,741)
665
(478)
11,757
(83)
11,674
38,333
(49,858)
(30)
–
(1,305)
(12,860)
–
(12,860)
3,608
8,284
(894)
10,998
CountPlus Annual Report 2019 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
45
1 General information
CountPlus Limited (‘the Group’) is a listed public company limited by shares, incorporated and domiciled in Australia, whose shares are publicly
traded on the Australian Securities Exchange (‘ASX’). The consolidated financial report of the Group for the year ended 30 June 2019 (‘the
financial report’) comprises the parent and its controlled entities (‘the Group’). CountPlus Limited is the ultimate parent entity in the Group.
The Group’s core business is to collaborate with leading accounting and advice firms for the long term success of the clients, people and
shareholders by the way of shared values, mutual success and sense of community.
The financial statements were authorised for issue in accordance with a resolution of Directors, on 6 September 2019.
2
Summary of Significant Accounting Policies
The principle accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies
have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the Group / Consolidated
entity consisting of CountPlus Limited and its subsidiaries.
(a)
Basis of preparation
These consolidated general-purpose financial statements have been prepared in accordance with Australian Accounting Standards,
Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the
Corporations Act 2001. CountPlus Limited is a for-profit entity for the purpose of preparing the financial statements.
Both the functional and presentation currency of CountPlus Limited and its subsidiaries is Australian dollars (A$) and the financial report
is presented in Australian dollars (A$). In accordance with ASIC Corporations (Rounding in Financial / Directors' Reports) Instrument 2016
/ 191, amounts in the financial report are rounded off to the nearest thousand dollars unless otherwise indicated.
(i)
Compliance with IFRS
These consolidated financial statements of the Group also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board (IASB).
(ii)
New and amended standards adopted by the Group
During the current year, the Group adopted all mandatory accounting standards. There were no standards adopted that have had a material
impact on the Consolidated entity.
None of any other new standards and amendments to standards that are mandatory for the first time for the financial year beginning
1 July 2018 affected any of the amounts recognised in the current period or any prior period and are not likely to affect future periods.
AASB 9 Financial Instruments
The Group early adopted AASB 9 in the year ended 30 June 2016. As a result, the standard has no impact on the year ended 30 June 2019.
AASB 15 Revenue from contracts with customers (effective for periods commencing on or after 1 January 2018)
The consolidated entity has adopted AASB 15 from 1 July 2017, using the fully retrospective approach. The standard provides a single
comprehensive model for revenue recognition. The core principle of the standard is that an entity shall recognise revenue to depict the
transfer of promised goods or services to customers at an amount that reflects the consideration to which the entity expects to be entitled
in exchange for those goods or services. The standard introduced a new contract-based revenue recognition model with a measurement
approach that is based on an allocation of the transaction price. This is described further in the accounting policies below. Credit risk is
presented separately as an expense rather than adjusted against revenue. Contracts with customers are presented in an entity's statement
of financial position as a contract asset, contract liability, or a receivable, depending on the relationship between the entity's performance
and the customer's payment. Customer acquisition costs and costs to fulfil a contract can, subject to certain criteria, be capitalised as an asset
and amortised over the contract period.
The adoption of AASB 15 resulted in the following adjustments:
Î
interest receivable now shown on the face of profit or loss;
Î work in progress now reclassified as contract asset; and
Î unearned revenue now reclassified as contract liability.
There was no change in the carrying amounts on the adoption of AASB 15 as at 1 July 2017.
Revenue arises mainly from accounting and financial planning services.
While this represents significant new guidance, the implementation of this new guidance did not have a significant impact on the timing
or amount of revenue recognised by the Group during the year.
CountPlus Annual Report 2019 46
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
(iii)
Accounting standards and interpretations issued but not yet effective
The AASB has issued new and amended Accounting Standards and Interpretations that have mandatory application dates for future
reporting periods. The Consolidated entity has decided against early adoption of these standards. Set out below is a summary of future
requirements, and their impact on the Consolidated entity:
AASB 16 Leases (effective for periods commenting on or after 1 January 2019)
AASB 16 replaces AASB 117 Leases, and certain other lease related interpretations. The new standard:
Î
requires all leases to be accounted for ‘on-balance sheet’ by lessees, other than short term and low value asset leases;
Î provides new guidance on the application of the definition of lease and on sale and lease back accounting; and
Î
requires new and different lease disclosures.
When this standard is first adopted for the year ended 30 June 2020, there will be a number of material impacts on the transactions and
balances recognised in the financial statements. The estimated likely impact on the financial statement as at 30 June 2020, based on facts
as at the date of the assessment are as follows:
As at the reporting date, the Group has non-cancellable operating lease commitments of $7,911,000, see note 27. Of these commitments,
approximately $104,000 relate to short term leases and $9,000 to low value leases which will both be recognised on a straight-line basis
as an expense in profit or loss.
For the remaining lease commitments, the Group expects to recognise right-of-use assets of approximately $10,427,000 on 1 July 2019, lease
liabilities of $12,029,000 and deferred tax assets of $481,000. Overall net assets will be approximately $1,444,000 lower, and net current assets
will be $2,142,000 lower due to the presentation of a portion of the liability of as a current liability.
The group expects that net profit after tax will decrease by approximately $24,000 for 30 June 2020 as a result of adopting the new rules.
Operating cash flows will increase, and financing cash flows decrease by approximately $2,674,000 as repayment of the principal portion
of the lease liabilities will be classified as cash flows from financing activities.
The Group will apply the standards from 1 July 2019. The Group intends to apply the simplified transition approach and will not restate
comparative amounts for the year prior to first adoption. Right-of-use assets for property leases will be measured on transition as if the
new rules had always been applied. All other right-of-use assets will be measured at the amount of the lease liability on adoption.
(iv)
Critical accounting estimates and judgements
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise
its judgement in the process of applying the Group's accounting policies. The areas involving a higher degree of judgement or complexity,
or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 38.
(v)
Historical cost convention
The Consolidated financial statements have been prepared on an accrual basis and are based on historical costs modified by the revaluation
of certain financial assets and financial liabilities for which the fair value basis of accounting has been applied.
(vi)
Changes to presentation
Wherever necessary, CountPlus Limited has regrouped and reclassified certain balances in the financial statements in order to provide
more relevant information to our stakeholders. The comparative information has been reclassified accordingly. These reclassifications
do not have any impact on the profit for the current year or prior year.
CountPlus Annual Report 2019 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
47
(b)
Principles of consolidation
(i)
Subsidiaries
The consolidated financial statements incorporate the assets and liabilities of all subsidiaries of CountPlus Limited (‘parent entity’) as at
30 June 2019 and the results of all subsidiaries for the year then ended. CountPlus Limited and its subsidiaries together are referred to in
this financial report as the Group or the Consolidated entity. Subsidiaries are all those entities over which the Group has control. The Group
controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and could affect those
returns through its power to direct the activities of the entity.
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that
control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. Intercompany transactions,
balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated unless the
transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with the policies adopted by the Group.
Non-controlling interests in the results and equity of subsidiaries are shown separately in the consolidated statement of profit or loss and
consolidated statement of financial position respectively.
Investments in subsidiaries are accounted for at cost in the financial statements of CountPlus Limited less any impairment charges.
(ii)
Associates
Associates are all entities over which the Group has significant influence but not control or joint control, generally accompanying a
shareholding of between 20% and 50% of the voting rights. Significant influence is the power to participate in the financial and operating
policy decisions of the investee but is not control or joint control over those policies.
Investments in associates are accounted for using the equity method of accounting, after initially being recognised at cost.
The Group's share of its associates' post acquisition profits or losses is recognised in profit or loss and its share of post-acquisition other
comprehensive income, is recognised in Other Comprehensive Income. The cumulative post acquisition movements are adjusted against
the carrying amount of the investment. Dividends from associates are recognised as reduction in the carrying amount of the investment.
When the Group's share of losses in an associate equal or exceeds its interest in the associate, including any other unsecured long term
receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.
(iii)
Employee share trust
The Group has formed a trust to administer the Group's Loan Funded Share Plan. This trust is consolidated as the substance of the
relationship is that the trust is controlled by the Group.
Shares held by the trust are disclosed as Treasury Shares and are deducted from contributed equity.
(c)
Financial Instruments
Recognition, initial measurement and derecognition
Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial
instrument, and are measured initially at fair value adjusted by transactions costs, except for those carried at fair value through profit or loss,
which are measured initially at fair value. Subsequent measurement of financial assets and financial liabilities are described below.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and
all substantial risks and rewards are transferred. A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
CountPlus Annual Report 2019 48
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
Classification and subsequent measurement of financial assets
Except for those trade receivables that do not contain a significant financing component and are measured at the transaction price
in accordance with AASB 15, all financial assets are initially measured at fair value adjusted for transaction costs (where applicable).
For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are
classified into the following categories upon initial recognition:
Î
Î
amortised cost; or
fair value through profit or loss (FVPL).
All income and expenses relating to financial assets that are recognised in profit or loss are presented within finance costs, finance income
or other financial items, except for impairment of trade receivables which is presented within other expenses.
Classifications are determined by both:
Î
Î
the entities business model for managing the financial asset; and
the contractual cash flow characteristics of the financial assets.
Subsequent measurement of financial assets
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions (and are not designated as FVPL):
Î
Î
they are held within a business model whose objective is to hold the financial assets and collect its contractual cash flows; and
the contractual terms of the financial assets give rise to cash flows that are solely payments of principal and interest on the principal
amount outstanding.
After initial recognition, these are measured at amortised cost using the effective interest method. Discounting is omitted where the effect
of discounting is immaterial. The Group’s cash and cash equivalents, trade and most other receivables fall into this category of financial
instruments.
Financial assets at fair value through profit or loss (FVPL)
Financial assets that are held within a different business model other than ‘hold to collect’ or ‘hold to collect and sell’ are categorised at fair
value through profit and loss. Further, irrespective of business model financial assets whose contractual cash flows are not solely payments
of principal and interest are accounted for at FVPL.
Impairment of Financial assets
AASB 9’s impairment requirements use more forward looking information to recognize expected credit losses – the ‘expected credit losses
model’. Instruments within the scope of the new requirements included loans and other debt-type financial assets measured at amortised
cost and FVOCI, trade receivables, contract assets recognised and measured under AASB 15 and loan commitments and some financial
guarantee contracts (for the issuer) that are not measured at fair value through profit or loss.
The Group considers a broader range of information when assessing credit risk and measuring expected credit losses, including past events,
current conditions, reasonable and supportable forecasts that affect the expected collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
Î
Î
financial instruments that have not deteriorated significantly in credit quality since initial recognition or that have low credit risk (‘Stage 1’);
and
financial instruments that have deteriorated significantly in credit quality since initial recognition and whose credit risk is not low (‘Stage 2’).
‘Stage 3’ would cover financial assets that have objective evidence of impairment at the reporting date.
‘12-month expected credit losses’ are recognised for the first category while ‘lifetime expected credit losses’ are recognised for the second
category.
Measurement of the expected credit losses is determined by a probability-weighted estimate of credit losses over the expected life of the
financial instrument.
CountPlus Annual Report 2019 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
49
Trade and other receivables and contract assets
The Group makes use of a simplified approach in accounting for trade and other receivables as well as contract assets and records the
loss allowance at the amount equal to the expected lifetime credit losses. In using this practical expedient, the Group uses its historical
experience, external indicators and forward-looking information to calculate the expected credit losses using a provision matrix.
The Group assesses impairment of trade receivables on a collective basis as they possess credit risk characteristics based on the days
past due.
Classification and measurement of financial liabilities
As the accounting for financial liabilities remains largely unchanged from AASB 139, the Group’s financial liabilities were not impacted by
the adoption of AASB 9.
The Group’s financial liabilities include borrowings, trade and other payables, contract liabilities and other liabilities. Financial liabilities are
initially measured at fair value, and, where applicable, adjusted for transaction costs unless the Group designated a financial liability at fair
value through profit or loss.
Subsequently, financial liabilities are measured at amortised cost using the effective interest method except for financial liabilities
designated at FVPL, which are carried subsequently at fair value with gains or losses recognised in profit or loss.
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in profit or loss are included within
finance costs or finance income.
(d)
Foreign currency translation
(i)
Functional and presentation currency
Items included in the financial statements of each of the Group's operations are measured using the currency of the primary economic
environment in which it operates ('the functional currency'). The Consolidated financial statements are presented in Australian dollars which
is the Group's functional and presentation currency.
(e)
Goods and Services Tax (GST)
Revenues, expenses and assets are recognised net of the amount of associated GST, unless the GST incurred is not recoverable from
the taxation authority. In this case it is recognised as part of the cost of acquisition of the asset or as part of the expense.
Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from,
or payable to, the taxation authority is included with other receivables or payables in the consolidated statement of financial position.
Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities which are
recoverable from, or payable to the taxation authority, are presented as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.
(f)
Comparatives
The significant accounting policies adopted in the preparation of the financial statements have been consistently applied to the current year
and the comparative period, unless otherwise stated. Where necessary, comparative information has been reclassified to be consistent with
current period disclosures.
CountPlus Annual Report 2019 50
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
3
Segment information
The chief operating decision making function (CODM) viewed the Group's operations under the following separate reportable segments:
Î Accounting
Î Financial Services
Î Other
which comprises the provision of accounting, audit and assurance, taxation and business and corporate
advisory services.
which comprises of financial planning services which separates TFS, a holder of an Australian Financial Services
licence (AFSL) and financial planning services offered by Partner firms.
which mainly comprises of information technology related revenue, legal related revenue, conference and
insurance related revenue.
The CODM primarily uses the measure of contribution margin (revenue less salaries and superannuation) to assess the performance of the
operating segments.
No segment assets and liabilities are disclosed because there is no measure of segment assets and liabilities regularly reported to the CODM.
(a)
Segment performance
Continuing Operations
Financial Services
Accounting
Financial
Services (Ex TFS)
Financial
Services (TFS)
Other
Total
Discontinued
Operations
Total
2019
$’000
2018
$’000
2019
$’000
2018
$’000
2019
$’000
2018
$’000
2019
$’000
2018
$’000
2019
$’000
2018
$’000
2019
$’000
2018
$’000
Revenue
Segment contribution margin 22,751 23,726
50,714 54,403 11,718
5,506
12,525
6,319
3,900
2,189
4,419
2,394
2,314
1,120
3,039 68,646
1,940 31,566
74,386
34,379
–
–
3,173
1,846
(b)
Reconciliation of segment contribution margin to profit from operations before income tax
Total contribution margin
Other income
Share of net profit of associates
Amortisation and depreciation expense
Premises expenses
Finance costs
Impairment of goodwill
Other costs
Profit from operations before income tax
Continuing Operations
Discontinued Operations
2019
$’000
31,566
2,527
1,553
(2,287)
(4,324)
(342)
(1,060)
(23,123)
4,510
2018
$’000
34,379
3,300
828
(2,912)
(4,494)
(463)
(4,700)
(23,326)
2,612
2019
$’000
–
–
–
–
–
–
–
–
–
2018
$’000
1,846
7
–
(120)
(152)
–
–
(554)
1,027
The segment revenue described above represents revenue generated from external customers.
Other costs include $10,702,000 of salaries and employee benefit expense that are not included in contribution margin. Regarding the
other operating expenses in the amount of $10,768,000 (refer note 5), acquisition related expenses of $1,840,000 have been included
in other costs.
CountPlus Annual Report 2019 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
51
4 Revenue and other income
(a)
Disaggregation of revenue
Segment revenue
Financial services revenue
Gross financial services revenue (b)
Fees, commissions and related costs (c)
Total financial services revenue
Accounting services revenue
Commission earned on property sales
Commission paid on property sales
Other property related income
Other operating revenue
Total revenue from operating activities
Timing of revenue recognition
At a point in time
Over time
Continuing Operations
Discontinued Operations
2019
$’000
2018
$’000
2019
$’000
2018
$’000
44,471
(28,853)
15,618
50,714
–
–
–
2,314
68,646
17,932
50,714
68,646
43,624
(26,680)
16,944
54,403
–
–
–
3,039
74,386
19,983
54,403
74,386
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
5,507
(2,855)
342
179
3,173
3,173
–
3,173
(b)
Gross financial services revenue
Gross financial services revenue includes revenue generated from services performed by authorised representatives of Total Financial
Solutions Australia Limited (TFS), an Australian Financial Services Licence holder. TFS is considered to be acting as agent under the
requirements of AASB 15 Revenue from Contracts with Customers, and therefore we have deducted fees, commissions and related costs,
to arrive at total financial services revenue of $15.618M (2018: $16.944M).
(c)
Fees, commissions and related costs
Fees, commissions and related costs are made up primarily of two components: those payable by subsidiary, Total Financial Solutions
Australia Limited to financial advisors in accordance with their Authorised Representative Agreements, and referral fees payable to its
affiliated members. Fees, commissions and related costs are deducted from gross financial services revenue to arrive at total financial
services revenue.
(d)
Other Income
Gain on disposal of investments, business units and subsidiaries are $1,000,000 in the current year. The $1,000,000 gain relates to the sale
of the Privilege model, a separately managed account platform to Morningstar Investment Management. The 2018 amount of $2,258,000
relates to the following items:
Î $108,000 gain on sale of Bentleys Corporate Advisory (WA) Pty Ltd;
Î $1,261,000 gain on sale of Twomeys Accounting and Advice Pty Ltd, Twomeys Wagga Financial Planning Pty Ltd and Audits Service
Company Pty Ltd;
Î $856,000 gain on sale of the business unit of Achieve Corporation, the payroll processing business unit; and
Î $33,000 gain on sale of Class shares.
(e)
Significant accounting policy
Revenue recognition
To determine whether to recognise revenue, the Group follows a 5-step process:
1. Identifying the contract with a customer;
2. Identifying the performance obligations;
3. Determining the transaction price;
4. Allocating the transaction price to the performance obligations; and
5. Recognising revenue when / as performance obligation(s) are satisfied.
CountPlus Annual Report 2019 52
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
The Group often enters into transactions involving a range of the Group’s products and services, for accounting and financial planning
services. In all cases, the total fee charged for an engagement is allocated amongst the various performance obligations based on their
relative stand-alone fees. The fee charged for an engagement excludes any amounts collected on behalf of third parties. Revenue is
recognised either at a point in time or over time, when (or as) the Group satisfies performance obligations by transferring the promised
services to its customers.
Performance obligations for accounting and financial planning revenue
The Group’s contracts comprise performance obligations around completing client deliverables in line with engagement letter terms
(based on the agreed billing method, standard of work and timeline). Under AASB 15, the Group must evaluate the separability of the
promised services based on whether they are ‘distinct’. A promised service is ‘distinct’ if both:
Î
Î
the customer benefits from the item either on its own or together with other readily available resources; and
it is ‘separately identifiable’ (i.e. the Group does not provide a significant service integrating, modifying or customising it).
Accounting services revenue is recognised over a period of time, with financial services revenue being recognised at a point in time.
Accounting revenue from the provision of accounting services is recognised on an accrual basis in the period in which the service is provided,
based on time spent and performance obligations satisfied. Any amounts unbilled at the end of the reporting period are presented in the
statement of financial position as contract assets. Recognition is in accordance with the terms of the client services agreement or engagement
letter, adjusted for any time that may not be recoverable with reference to the professional hours incurred. Client engagement letter gives
an enforceable right to payment for performance completed to date, including a reasonable margin if the contract is terminated by the
customer for reasons other than CountPlus' failure to perform as promised.
Financial planning revenue from the provision of financial planning services, loans commission and leasing commission is recognised at
a point in time in the period in which the service is provided.
Commission earned on property sales is recognised in the accounting period in which the services are rendered. Revenue is recognised after
an estimation of the percentage of work completed, based on actual service provided as a proportion of the total services to be provided.
Interest revenue is recognised when there is control of the right to receive the interest payment.
Dividends received from associates are accounted for in accordance with the equity method of accounting. Other revenue is recognised
when the right to receive payment is established.
All revenue is stated net of the amount of goods and services tax (GST).
5
Expenses
This note provides a breakdown of the items included in ‘Other operating expenses’ and ‘Salaries and employee benefits expense’.
Professional, service and consulting fees
Audit fees
Legal fees
Accounting and other professional fees
Total professional, service and consulting fees
Other expenses
Sales and marketing expenses
Administration expenses
Insurance expense
Technology expense
Net loss on disposal of property, plant and equipment
Other
Total other expenses
Total other operating expenses from continuing operations
Total other operating expenses from discontinued operations
Salaries and employee benefit expenses
Wages, salaries and on-costs
Post-employment benefit expenses
Other employee benefit expenses
Total salaries and employee benefit expenses from continuing operations
Total salaries and employee benefit expense from discontinued operations
2019
$’000
389
664
654
1,707
855
2,547
1,727
3,422
10
500
9,061
10,768
–
39,450
3,545
4,711
47,706
–
2018
$’000
384
802
586
1,772
787
2,790
1,551
3,373
35
387
8,923
10,695
416
43,286
3,885
5,036
52,207
1,465
CountPlus Annual Report 2019 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
53
6
Tax expense
(a)
Income tax expense
Current tax expense
Over provision
Deferred tax benefit
Income tax expense
Deferred income tax expense (income) included in income tax expense comprises:
Increase / (decrease) in deferred tax assets (note 11(c))
Decrease in deferred tax liabilities (note 11(e))
Total
(b)
Reconciliation of income tax expense to prima facie tax payable
Profit from continuing operations before income tax expense
Australian tax rate
Tax amount at the Australian tax rate
Tax effect of amounts which are not deductible / (taxable) in calculating taxable income:
Non-deductible depreciation and amortisation
Gain on disposal of subsidiaries
Gain on disposal of investments
Gain on sale of product
Goodwill impairment expense
Non-deductible expenses
Share of equity accounted investments
Non-taxable income
Gain on deferred consideration
Benefit on trail commission
Recognition of realisation of prior year reserve transaction
Taxable capital gain on sale of shares
Initial recognition of deferred tax asset on capital losses
Utilisation of capital losses not previously brought to account
Utilisation of capital losses previously brought to account
Profit on disposal of parcel of fees
Clawback on purchase price
Profit on legal settlement
Other
Over provision in prior years
Total income tax expense
2019
$’000
1,797
(2)
(241)
1,554
400
(641)
(241)
2019
$’000
4,510
30%
1,353
–
–
–
(273)
318
481
(443)
(40)
–
(22)
–
–
(5)
–
366
(75)
(31)
(60)
(13)
1,556
(2)
1,554
2018
$’000
1,835
(8)
(1,527)
300
(418)
(1,109)
(1,527)
2018
$’000
2,612
30%
784
70
(378)
(10)
(257)
1,410
539
(200)
–
(81)
(28)
(45)
107
(845)
(758)
–
–
–
–
–
308
(8)
300
The Group continues to account for their own current and deferred tax amounts. The current and deferred tax amounts are measured
in a systematic manner that is consistent with the principles in AASB 112 Income Taxes.
CountPlus Annual Report 2019 54
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
(c)
Significant accounting policy
Income tax
The income tax expense or benefit for the period is the tax payable on that period’s taxable income based on the applicable income tax rate
for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses
and the adjustment recognised for prior periods, where applicable.
Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are
recovered, or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:
Î when the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or liability in a transaction that
is not a business combination and that, at the time of the transaction, affects neither the accounting nor taxable profits; or
Î when the taxable temporary difference is associated with interests in subsidiaries, associates or joint ventures, and the timing of the
reversal can be controlled, and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable
amounts will be available to utilise those temporary differences and losses.
Tax consolidation legislation
The parent and its 100% owned Australian subsidiaries formed an income tax consolidation group with effect from 5 November 2010.
Subsidiaries joined the tax consolidation group from the date they became wholly owned. They would exit the tax consolidation group
once they are less than 100% owned. The parent and the controlled entities in the tax consolidated group account for their own current
and deferred tax amounts. These tax amounts are measured as if each entity in the tax consolidated group continues to be a stand-alone
taxpayer.
Members of the CountPlus tax consolidation group entered into a tax sharing and funding agreement. Under the terms of this agreement,
each member in the tax consolidation group agreed to make a tax equivalent payment to the parent based on their current tax liability or
current tax asset. Deferred taxes are recorded by members of the tax consolidation group in accordance with the principles of AASB 112
Income Taxes.
7 Cash and cash equivalents
Cash at bank and in hand
2019
$’000
10,258
2018
$’000
10,998
(a)
Reconciliation of cash at the end of the year
The above figures are reconciled to cash at the end of the financial year as shown in the consolidated statement of cash flows.
(b)
Risk exposure
The Group’s exposure to interest rate risk is discussed in note 35. The maximum exposure to credit risk at the end of each reporting period
is the carrying amount of cash and cash equivalents mentioned above.
(c)
Significant accounting policy
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits held at call with banks, other short term highly liquid investments with
original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the
consolidated statement of financial position.
CountPlus Annual Report 2019 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
55
8
Trade and other receivables
(a)
Current assets – Trade and other receivables
Trade receivables
Allowance for expected credit losses
Prepayments
Other receivables
2019
$’000
9,558
(570)
8,988
1,113
1,808
11,909
(b)
Ageing analysis of trade receivables
As at 30 June, the ageing analysis of receivables is as follows and represents both current and overdue but not impaired receivables:
Current
0 to 1 month
1 to 3 months
3 to 6 months
Over 6 months
2019
$’000
6,308
923
589
650
1,088
9,558
2018
$’000
10,302
(980)
9,322
1,133
509
10,964
2018
$’000
6,201
1,322
1,620
722
437
10,302
Trade receivables are non-interest bearing and are generally on 30-day terms. Allowance for expected losses is recognised when there
is objective evidence that a trade receivable is impaired and is based on the Group policies. Reversal of impairment and (impairment)
of receivables of $103,000 (2018: $333,000) has been recognised by the Group in the current year. These amounts have been included
on the face of the statement of profit and loss.
(c)
Significant accounting policy
Trade receivables
Trade receivables are initially recognised at their fair value and subsequently measured at amortised cost using the effective interest
method, less allowance for expected losses.
Recoverability of trade receivables is reviewed on an ongoing basis. Trade receivable balances which are known to be uncollectable are
written off by reducing the carrying amount directly. An allowance for expected losses on trade receivables is raised by applying a rate
based on historic collection rates for overdue balances, which are reassessed each year, and adjusted specific debtors where management
is aware of specific conditions which affect the likely recovery of outstanding balances. The loss allowance is the amount equal to the
expected lifetime credit losses.
The allowance for expected losses of receivables is the difference between the asset’s carrying amount and the present value of estimated
future cash flows, discounted at the original effective interest rate if the impact of discounting is considered material.
Significant accounting judgements, estimates and assumptions
Allowance for expected losses of receivables
The allowance for expected losses of receivables assessment requires a degree of estimation and judgement. The level of expected credit
losses is assessed by considering the ageing of receivables, historical collection rates and specific knowledge of the individual debtor’s
financial position.
CountPlus Annual Report 2019 56
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
(d) Movements and aging of allowance for expected credit losses
Movements in the allowance for expected credit losses of trade receivables are as follows:
At 1 July
Reversal of impairment / (impairment) of receivables
Receivables written off during the year as uncollectable
At 30 June
2019
$’000
(980)
103
307
(570)
2018
$’000
(1,167)
(333)
520
(980)
The creation and release of the allowance for expected credit losses has been included on the face of the statement of profit or loss and
other comprehensive income. Amounts charged to the allowance account are generally written off when there is no expectation of
recovery.
The maximum exposure to credit risk at reporting date is the carrying amount of each class of receivables mentioned above. Refer to note 35
for more information on the risk management policy of the Group.
As at 30 June, the aging of the allowance for expected credit losses is as follows:
Current
1 to 3 months
3 to 6 months
Over 6 months
(e)
Non-current assets – Receivables
Other receivables
9
Loans and advances
Loans and advances
10 Contract assets
Contract assets
Allowance for expected credit losses of contract assets
2019
$’000
14
6
98
452
570
2019
$’000
672
672
2019
$’000
19
2019
$’000
3,693
(171)
3,522
2018
$’000
5
37
268
670
980
2018
$’000
1,300
1,300
2018
$’000
205
2018
$’000
4,340
–
4,340
Contract assets have decreased from FY18 as a result of improved management of working capital and billing of contract assets.
CountPlus Annual Report 2019 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
(a)
Aging of contract assets
As at 30 June, the aging of the allowance for expected credit losses is as follows:
Current
1 to 3 months
3 to 6 months
Over 6 months
(b)
Significant accounting policy
Contract assets
57
2018
$’000
1,800
1,275
672
593
4,340
2019
$’000
1,458
1,145
585
505
3,693
Contract assets represents costs incurred and profit recognised on client assignments and services that are in progress and have not yet
been invoiced at reporting date. Contract assets are valued at net realisable value after providing for any expected credit losses. Contract
assets are recognised in the statement of financial position and the movement recognised in the statement of profit or loss. Financial
planning contract assets not representing fees for services, are not recognised in the statement of financial position and statement of
comprehensive income until invoiced.
Significant accounting judgements estimates and assumptions
Allowance for expected credit losses
The recoverability of contract assets is assessed and reviewed by management on a regular basis. The allowance for expected credit losses
of contract assets assessment requires a degree of estimation and judgement. The level of expected credit losses is assessed by considering
the ageing of contract assets, historical billing and collection rates and specific knowledge of the individual customer’s financial position.
(c) Movements and aging of allowance for expected credit losses
Movement in provision for allowance of credit losses.
At 1 July
Allowance for credit losses recognised in the year
Unused amounts reversed
At 30 June
As at 30 June, the aging of the allowance for expected credit losses is as follows:
Current
1 to 3 months
3 to 6 months
Over 6 months
2019
$’000
–
(171)
–
(171)
2019
$’000
–
16
31
124
171
2018
$’000
(555)
–
555
–
2018
$’000
–
–
–
–
–
The creation and release of the allowance for expected credit losses has been included on the face of the statement of profit or loss and
other comprehensive income. Amounts charged to the allowance account are generally written off when there is no expectation of recovery.
The maximum exposure to credit risk at reporting date is the carrying amount of each class of receivables mentioned above. Refer to note 35
for more information on the risk management policy of the Group.
CountPlus Annual Report 2019 58
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
11 Tax assets and liabilities
(a)
Current tax assets and liabilities
Current tax (payable) / receivable
(b)
Deferred tax assets
The balance comprises temporary differences attributable to:
Employee liabilities (annual leave and long service leave)
Bad and doubtful debts
Professional fees
Make good
Rent free period
Accruals
Loan establishment costs
Tax losses
Other
Total deferred tax assets
Set-off of deferred tax liabilities pursuant to set-off provisions
Net deferred tax assets
(c) Movements in deferred tax assets
At 1 July 2017
Credited to income tax expense
Deferred tax balance on disposal of subsidiaries
At 30 June 2018
At 1 July 2018
Charged to income tax expense
Increase in tax losses
At 30 June 2019
2019
$’000
(336)
2019
$’000
1,675
171
17
67
16
274
–
748
45
3,013
(2,463)
550
2018
$’000
59
2018
$’000
1,604
294
32
87
23
210
8
1,063
43
3,364
(2,974)
390
$’000
3,257
418
(311)
3,364
3,364
(400)
49
3,013
CountPlus Annual Report 2019 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
59
(d)
Deferred tax liabilities
The balance comprises temporary differences attributable to:
Work in progress
Prepaid expenses
Fair valued intangible assets
Other
Total deferred tax liabilities
Set-off of deferred tax assets pursuant to set-off provisions (refer note 11(b) above)
Net deferred tax liabilities
(e) Movements in deferred tax liabilities
Share of profit
of associates
$’000
Fair valued
intangible assets
$’000
98
–
102
(200)
–
–
–
–
–
2,042
(9)
154
(553)
1,634
1,634
130
(380)
1,384
At 1 July 2017
Net deferred tax balance on acquisition of subsidiaries*
Unwinding DTL / Overprovision
Credited to the income tax expense
At 30 June 2018
At 1 July 2018
Net deferred tax balance on acquisition of subsidiaries*
Credited to the income tax expense
At 30 June 2019
* Includes business assets acquired by Partner firms.
(f)
Significant accounting policy
2019
$’000
1,057
15
1,385
6
2,463
(2,463)
–
Other
$’000
2,757
(805)
(256)
(356)
1,340
1,340
–
(261)
1,079
2018
$’000
1,301
10
1,634
29
2,974
(2,974)
–
Total
$’000
4,897
(814)
–
(1,109)
2,974
2,974
130
(641)
2,463
Significant accounting judgements, estimates and assumptions
Deferred taxes
The Group is subject to taxes in Australia. The application of tax law to the specific circumstances and transactions of the Consolidated entity
requires the exercise of judgement by management. The tax treatments adopted by management in preparing the financial statements may
be impacted by changes in legislation and interpretations or be subject to challenge by tax authorities.
Recognition of Deferred Tax Assets on Capital Losses
CountPlus has recognised a deferred tax asset on tax capital losses. CountPlus plans to continue with the successful Owner, Driver – Partner
model which is expected to result in transactions with core firms over the next two to three years. A consequence of these transactions
is likely to create taxable capital gains. The envisaged structure of most of the transactions, being share sale transactions, are subject
to pre-defined financial hurdles being met by firms. Both the structure of the transactions and the potential increase in value in the firms
are likely to give rise to taxable capital gains which the Group has concluded will result in the deferred tax assets being utilised in the
foreseeable future.
CountPlus Annual Report 2019 60
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
12 Property, plant and equipment
Year 30 June 2018
Opening net book amount
Additions
Deconsolidation of subsidiary
Disposals – written down value
Depreciation expense
Closing net book value
At 30 June 2018
Cost
Accumulated depreciation
Net book value
Year 30 June 2019
Opening net book amount
Additions
Disposals – written down value
Depreciation expense
Closing net book value
At 30 June 2019
Cost
Accumulated depreciation
Net book value
Office
Equipment
$’000
Furniture,
fixtures
and fittings
$’000
Leasehold
improvements
$’000
Other
property,
plant and
equipment
$’000
Motor
vehicle
$’000
1,614
405
(233)
(97)
(375)
1,314
3,011
(1,697)
1,314
1,314
486
(12)
(425)
1,363
4,324
(2,961)
1,363
1,071
141
(19)
(13)
(231)
949
2,413
(1,464)
949
949
115
–
(222)
842
2,830
(1,988)
842
1,020
59
(8)
–
(85)
986
1,476
(490)
986
986
260
–
(106)
1,140
1,678
(538)
1,140
541
176
(148)
(8)
(143)
418
1,567
(1,149)
418
418
–
(28)
(81)
309
1,343
(1,034)
309
82
14
(35)
(15)
(8)
38
101
(63)
38
38
18
–
(13)
43
100
(57)
43
Total
$’000
4,328
795
(443)
(133)
(842)
3,705
8,568
(4,863)
3,705
3,705
879
(40)
(847)
3,697
10,275
(6,578)
3,697
(a)
Significant accounting policy
Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and any impairment loss. Historical cost includes
expenditure that is directly attributable to the acquisition of the items.
Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs
and maintenance are charged to profit or loss during the reporting period in which they are incurred.
Depreciation is calculated using the straight-line method to allocate their cost or revalued amounts, net of their residual values, over their
estimated useful lives or, in the case of leasehold improvements and certain leased plant and equipment, the shorter lease term, as follows:
Leasehold improvements
10% – 20%
Office equipment
4% – 67%
Furniture, fixtures and fittings 8% – 37%
Make good
Motor vehicle
Over the estimated life of the lease
20% – 25%
The assets' residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.
Provision for make good
A provision has been made for the present value of anticipated costs of future restoration of various leased office premises. The provision
includes future cost estimates associated with refurbishment to restore the leased premises to their original conditions. Provision recognised
for each office is measured at management's best estimate of the expenditures where it is probable that an outflow of resources will be
required. Changes to the estimated future costs for sites are recognised in the statement of financial position by adjusting both the expense
or asset (if applicable) and provision.
CountPlus Annual Report 2019
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
13
Intangible assets
Year 30 June 2018
Opening net book value
Additions
Additions through business combinations
Disposals
Deconsolidation
Amortisation
Impairment expense
Closing net book value
At 30 June 2018
Cost
Accumulated amortisation and impairment
Net book value
Year 30 June 2019
Opening net book value
Additions
Acquisitions through business combinations
Disposals
Amortisation
Impairment expense
Closing net book value
At 30 June 2019
Cost
Accumulated amortisation and impairment
Net book value
(a)
Impairment tests for goodwill
Acquired
client
relationship
/ Adviser
networks
$’000
Goodwill
$’000
Brands
$’000
IT
software
$’000
Other
intangible
assets
$’000
35,263
–
541
(575)
(2,570)
–
(4,700)
27,959
36,889
(8,930)
27,959
27,959
902
–
(1)
–
(1,060)
27,800
37,790
(9,990)
27,800
7,653
–
298
–
(173)
(1,964)
–
5,814
25,565
(19,751)
5,814
5,814
442
–
(30)
(1,331)
–
4,895
25,978
(21,083)
4,895
1,193
–
–
–
(1,193)
–
–
–
1,193
(1,193)
–
–
–
–
–
–
–
–
–
–
–
216
33
–
(48)
(46)
(87)
–
68
525
(457)
68
68
62
50
–
(50)
–
130
637
(507)
130
669
–
–
(213)
(50)
(19)
–
387
408
(21)
387
387
20
–
–
(59)
–
348
428
(80)
348
61
Total
$’000
44,994
33
839
(836)
(4,032)
(2,070)
(4,700)
34,228
64,580
(30,352)
34,228
34,228
1,426
50
(31)
(1,440)
(1,060)
33,173
64,833
(31,660)
33,173
Goodwill acquired through business combinations has been allocated to and is tested at the level of the respective cash generating units
(CGUs), for impairment testing.
For the purpose of impairment testing, fourteen of the eighteen Partner firms listed in note 29, are considered as separate CGUs, operating
largely independently from other businesses in the Group. All subsidiaries are separately identified in note 29.
The Group utilises a value in use calculation using cash flow projections from financial budgets approved by senior management covering
a five-year period to assess the recoverable amount of the CGUs. A pre-tax discount rate has been applied to cash flow projections and cash
flows beyond the five-year period have been extrapolated using a growth rate of 2.5%. This method is used to assess impairment for the
individually significant CGUs. The same methodology of impairment testing is performed across all CGUs.
CountPlus Annual Report 2019
62
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
For the purpose of annual impairment testing, goodwill is allocated to the following cash-generating units:
Significant cash generating units
CountPlus One Pty Ltd
The MBA Partnership Pty Ltd
Kidmans Partners Pty Ltd
360 Financial Advantage Pty Ltd
Bentleys (WA) Pty Ltd
Crosby Dalwood Pty Ltd
Mogg Osborne Pty Ltd
Remaining cash-generating units
2019
$’000
4,761
4,172
3,617
3,492
1,826
1,782
1,629
6,521
27,800
2018
$’000
4,761
4,172
3,617
2,590
1,826
1,782
1,629
7,582
27,959
(b)
Key assumptions used for value in use calculations
The calculation of value in use for the CGUs was most sensitive to the following assumptions:
Î Revenue growth;
Î Employment expense ratios;
Î EBITA margin; and
Î Discount rates.
Revenue growth is based on the budget for the next financial year as well as management assessment over the forecast period. Budget
revenue for 2020 is based on management expectations and the average annual revenue growth thereafter is assumed to be maintained
at 3% p.a. over the remaining forecast period for all CGUs.
Employment expense ratios are based on the budget for the next financial year and management assessment over the forecast period.
Employment expense ratio shows the employment cost as a percentage of net revenue. This is assumed to be maintained between 52%
and 70% over the forecast period.
Discount rates represent the current market assessment of the risks specific to the Group, considering the time value of money and specific
risk of the underlying assets that have not been incorporated into the cash flow estimates. The discount rate is calculated using the weighted
average cost of capital (WACC) and reflects management’s estimation of the time value of money and specific risk estimated for the Group.
The WACC considers both debt and equity. The cost of equity is derived from the expected return on investment by the Group’s investors.
It incorporates a beta factor to reflect the specific risk associated with the industries in which the Group operates. The cost of debt is based
on the interest-bearing borrowings the Group is obliged to service. A pre-tax discount rate of 18.57% (2018: 18.57%) was applied to all CGUs
(13.00% post tax) (2018: 13.00% post tax).
It is assumed for the purpose of the analysis that the long term growth rate (terminal rate) will equate to the long term average growth
rate of the national economy. Management estimate this to be 2.5% p.a. which is in line with the long term expected Australian inflation
rate. The sensitivity analysis concluded that changing this rate to reflect possible lower growth projections would not materially impact
the valuations of the individual CGUs.
(c)
Impairment of goodwill
At 30 June 2019 management performed impairment testing for each cash generating unit (CGU) of CountPlus. Management calculated
the recoverable amount of the CGUs in accordance with AASB 136: Impairment of Assets at 30 June 2019 using a pre-tax discount rate
of 18.57% (30 June 2018: 18.57%). An impairment loss of $1,060,000 was recognised for the CGU relating to the CountPlus FS Holdings
Pty Ltd (TFS Group) due to the sale of its separately managed account platform available on HUB24 (Privilege Managed Account).
Post the impairment loss, the goodwill recognised at Group level for TFS Group is nil.
There have been no further impairments identified other than the TFS impairment loss noted above.
For the below CGUs where an indication of impairment existed, management calculated the recoverable amount of these CGUs in
accordance with AASB 136: Impairment of Assets.
CountPlus Annual Report 2019 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
63
Key assumptions for this value in use calculation at 30 June 2019 were:
Î Revenue growth of 3%;
Î Employment expense ratio 52% – 70%;
Î A pre-tax discount rate of 18.57%; and
Î The long term growth rate (terminal rate) was estimated to be 2.5% p.a.
The recoverable amount of the above CGUs was determined based on value-in-use calculations, consistent with the methods used
in prior years.
(d)
Sensitivity to changes in assumptions
A cash-generating unit is the smallest group of assets that independently generates cash flow and whose cash flow is largely independent
of the cash flows generated by other assets. The concept is used by the International Financial Reporting Standards in the determination
of asset impairment.
Sensitivity has been tested for the following two CGUs based on management assessment that the assumptions in the value in use
calculation for these CGUs were most sensitive to change.
For CountPlus One: The recoverable amount as determined by the value in use calculation exceeds the carrying value by $416,000.
Reasonably possible changes in assumptions will not result in impairment except the following:
Î Other things being equal, if the company’s yearly revenue is 5% less than expected over the forecast period, an impairment of $1,308,000
would result.
Î Other things being equal, if the pre-tax discount rate is increased from 18.57% to 20.00%, an impairment loss of $50,000 would result.
Î
Î
If the company’s employment cost margin (its single largest expense item) increases from 64% to 66% over the forecast period,
an impairment loss of $29,000 would result.
If the long term average growth rate decreases from 2.5% to 1% p.a., an impairment loss of $58,000 would result.
For 360 Financial Advantage: The recoverable amount as determined by the value in use calculation exceeds the carrying value
by $1,799,000.
Reasonably possible changes in assumptions will not result in impairment except the following:
Î Other things being equal, if the company’s yearly revenue is 5% less than expected over the forecast period, the recoverable amount
would exceed the carrying amount by $200,000.
Î Other things being equal, if the pre-tax discount rate is increased from 18.57% to 20.00%, the recoverable amount would exceed the
carrying value by $1,346,000.
Î
Î
If the company’s employment cost margin (its single largest expense item) increases from 66% to 68% over the forecast period, the
recoverable amount would exceed the carrying value by $1,371,000.
If the long term average growth rate decreases from 2.5% to 1% p.a., the recoverable amount would exceed the carrying value
by $1,336,000.
For all CGUs:
Across all CGUs over the forecast period, if revenue is 10% lower than expectations, an impairment of $4,980,000 would result.
Management believes that no other reasonable change in the key assumptions would cause the carrying value to materially exceed
its recoverable amount.
CountPlus Annual Report 2019 64
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
(e)
Amortisation period of intangible assets other than Goodwill
The amortisation period for the intangible assets are as follows:
Acquired client relationships
10 years
Adviser networks
Software
15 years
1 – 5 years
The factors that are considered in determining the useful life of an intangible asset are:
Î
Î
Î
Î
the expected usage of the asset by the entity and whether the asset could be managed efficiently by another management team;
typical product life cycles for the asset and public information on estimates of useful lives of similar assets that are used in a similar way;
technical, technological, commercial or other types of obsolescence;
the stability of the industry in which the asset operates and changes in the market demand for the products or services output from
the asset;
Î expected actions by competitors or potential competitors;
Î
Î
the level of maintenance expenditure required to obtain the expected future economic benefits from the asset and the entity’s ability
and intention to reach such a level;
the period of control over the asset and legal or similar limits on the use of the asset, such as the expiry dates of related leases; and
Î whether the useful life of the asset is dependent on the useful life of other assets of the entity.
(f)
Significant accounting policy
Significant accounting judgements, estimates and assumptions
Impairment of intangible assets
At each reporting date, the Group reviews the recoverable amount of its intangible assets to determine whether there is any indication that
these assets may be impaired. If such an indication exists, the recoverable amount of the asset, assessed as the higher of its fair value less
costs to sell and its value in use, is compared to its current carrying amount. Any excess of the asset’s carrying value over its recoverable
amount is expensed in the statement of profit or loss.
The Group determines whether goodwill is impaired at least on an annual basis. This requires estimation of the recoverable amount of the
CGU by determining the value in use of each individual CGU.
Acquired client relationships are tested for impairment whenever there is an indication that the intangible asset may be impaired. This
assessment is made at least on an annual basis. The net carrying value is compared with the expected future benefits from the relationships
for each cash generating unit. If the carrying value of the relationships is higher than the expected future benefits an impairment loss is
recorded for the difference.
(i)
Goodwill
Goodwill acquired in a business combination is initially measured at cost of the business combination being the excess of the consideration
transferred over the fair value of the entity’s identified assets acquired and liabilities assumed, if this consideration transferred is lower than
the fair value of the net identified assets of the subsidiary acquired, the difference is recognised in profit or loss.
Goodwill on consolidation is initially recorded at the amount by which the purchase price for a business combination exceeds the fair
value attributed to the interest in the net fair value of identifiable assets, liabilities and contingent liabilities acquired at date of acquisition.
Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill is tested annually for impairment, is allocated to cash
generating units and carried at cost less accumulated impairment losses. Gains and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
(ii)
IT software
Costs incurred in developing products or systems and costs incurred in acquiring software and licenses that will contribute to future period
financial benefits through revenue generation and / or cost reduction, are capitalised to software and systems. Costs capitalised include
external direct costs of materials and service and direct payroll and payroll related costs of employees' time spent on the project.
Amortisation is calculated on a straight-line basis over periods generally ranging from 3 to 5 years. IT software is tested for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised
in the statement of profit or loss for the amount by which the asset’s carrying amount exceeds its recoverable amount.
CountPlus Annual Report 2019 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
65
(iii)
Acquired client relationships and Adviser networks
Acquired client relationships are intangible assets identified in the acquisition of businesses and represent that part of the purchase
consideration that is attributable to and represented by the clients and customers with long term relationships with the business being
acquired. These assets are capitalised at fair values at the date of acquisition. Acquired client relationships are amortised over their useful
life and tested for impairment at least annually and whenever there is an indication that the carrying value of the intangible asset may
be impaired. The useful life of these assets are 10 years and they are amortised and expensed using the straight-line method. This is in
accordance with the expected pattern of future benefits based on the net cash flows expected from those relationships. The amortisation
period and the amortisation method are reviewed at least annually as at 30 June to ensure the amortisation expense reflects the
performance of the intangible asset.
Adviser networks are the intangible assets identified in the acquisition of the TFS Group and represent that part of the purchase consideration
that is attributable to and represented by the advisers with long term relationships with that business. These assets were capitalised at fair
value at the date of the acquisition, amortised over their useful life and tested for impairment at least annually and whenever there is an
indication that the carrying value of the intangible asset may be impaired. The useful life of these assets is 10 to 15 years and are amortised
and expensed using a declining balance method. This is in accordance with the expected pattern of future benefits based on the net cash
flows expected from those networks. The amortisation period and the amortisation method are reviewed at least annually as at 30 June
to ensure that the amortisation expense reflects the performance of the intangible asset.
(iv)
Other intangible assets
Other intangible assets acquired are recognised at cost at acquisition. Following initial recognition, they are carried at cost less any
accumulated amortisation and accumulated impairment losses. These assets are amortised over the useful economic life and assessed for
impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss
is recognised in the statement of profit or loss for the amount by which the asset’s carrying amount exceeds its recoverable amount.
This is in accordance with the expected pattern of future benefits based on the net cash flows expected from those assets. The amortisation
period and the amortisation method are reviewed at least annually as at 30 June to ensure the amortisation expense reflects the
performance of the intangible asset.
(v)
Impairment of assets
Goodwill and intangible assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment,
or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised
for the amount by which the asset's carrying amount exceeds its recoverable amount. For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash flows from
other assets or groups of assets (cash generating units). Non-financial assets, other than goodwill that suffered an impairment, are reviewed
for possible reversal of the impairment at the end of each reporting period.
At each reporting date, the Group assesses whether there is any indication that an asset may be impaired, or more frequently if events or
changes in circumstances indicate that they might be impaired. Where an indicator exists, the Group makes a formal estimate of the asset’s
recoverable amount. Where the carrying amount of an asset exceeds its recoverable amount the asset is impaired and is written down to its
recoverable amount.
Recoverable amount is the higher of an asset's fair value less costs to sell and its value in use. It is determined for an individual asset, unless
the asset’s value in use cannot be estimated to be close to its fair value less costs to sell and it does not generate cash inflows that are largely
independent of those from other assets or groups of assets, in which case, the recoverable amount is determined in aggregate for the cash
generating unit to which the asset belongs.
In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects
current market assessments of the time value of money and the risks specific to the asset.
Non-financial assets, other than goodwill that suffer an impairment, are tested for possible reversal of the impairment whenever events
or changes in circumstances indicate that the impairment may have reversed.
CountPlus Annual Report 2019 66
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
14
Interest in Associates
(a)
Details of Associates
One Hood Sweeney Pty Ltd
Hunter Financial Planning Pty Ltd
OBM Financial Services Pty Ltd
Rundles CountPlus Pty Ltd
Rundles Financial Planning Pty Ltd
Principal place of
business / Country
of Incorporation
Percentage
Owned (%)
2019
Percentage
Owned (%)
2018
Australia
Australia
Australia
Australia
Australia
32.36
40.00
40.00
40.00
20.00
32.36
40.00
0.00
0.00
0.00
The percentage of ownership interest held is equivalent to the percentage of voting rights for all associates.
Summary of associates held during the year
One Hood Sweeney Pty Ltd
One Hood Sweeney is a South Australian professional services firm located across Adelaide, Whyalla and Kadina. It provides accounting,
business advisory, financial planning, finance and technology services to its clients.
Hunter Financial Planning Pty Ltd
Hunter Financial is a financial planning specialist based in Newcastle. Hunter Financial offers a consultative approach to wealth management
particularly in the area of wealth creation budgeting, insurance, estate planning and SMSF.
OBM Financial Services Pty Ltd
OBM Financial Services Pty Ltd (OBM) is a professional services firm based in Ivanhoe, Victoria. It provides accounting and financial planning
services to its clients. OBM is a Count Financial member firm.
Rundles CountPlus Pty Ltd
Rundles CountPlus is a professional services firm based in Melbourne, Victoria. It provides accounting and business advisory services
to its clients.
Rundles Financial Planning Pty Ltd
Rundles Financial Planning is a professional services firm based in Melbourne, Victoria. It provides financial planning services to its clients.
(b)
Associates
All associates have the same year end as the parent entity (30 June).
There are no significant restrictions on the ability of associates to transfer funds in the form of cash dividends or to repay loans or advances
to the consolidated entity.
CountPlus Annual Report 2019 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
67
(c) Material associates
The following information is provided for associates that are material to the Consolidated entity. Figures are as per the associate’s financial
statements:
Name of Associate
One Hood Sweeney
Pty Ltd
Hunter Financial
Planning Pty Ltd
OBM Financial
Services Pty Ltd
Rundles CountPlus
Pty Ltd
2019
$’000
2018
$’000
2019
$’000
2018
$’000
2019
$’000
2018
$’000
2019
$’000
2018
$’000
Summarised Consolidated
Statement of Financial Position
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets / equity
5,010
6,475
(4,074)
(2,221)
5,190
3,621
6,693
(6,539)
(148)
3,627
1,354
7,069
(760)
(26)
7,637
514
7,316
(313)
(325)
7,192
948
315
(885)
(30)
348
–
–
–
–
–
1,607
4,084
(3,035)
–
2,656
–
–
–
–
–
Percentage of Group's ownership
32.36%
32.36%
40.00%
40.00%
40.00%
0%
40.00%
0%
Summarised Consolidated Statement of
Profit or Loss and Other Comprehensive
Income
Revenue
Profit for the year
Total comprehensive income
Group share of profit for the year
Associates
20,826
19,294
2,942
2,942
952
2,580
2,580
678
3,196
1,052
1,052
421
3,126
2,280
614
614
150
278
278
111
–
–
–
–
751
139
139
56
–
–
–
–
Reconciliation of carrying amount of interest in associates to summarised financial information for associates accounted for using the
equity method:
One Hood Sweeney Pty Ltd
Opening balance
Share of profit
Dividends
Carrying amount based on share in net assets of associate
Hunter Financial Planning Pty Ltd
Opening balance
Share of profit
Dividends
Carrying amount based on share in net assets of associate
2019
$’000
6,464
952
(520)
6,896
2019
$’000
2,624
421
(236)
2,809
2018
$’000
6,305
835
(676)
6,464
2018
$’000
2,619
245
(240)
2,624
CountPlus Annual Report 2019 68
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
McQueen Financial Group Pty Ltd
Opening balance
Disposal of associate
Share of profit
Dividends
Carrying amount based on share in net assets of associate
Nixon Financial Services Pty Ltd
Opening balance
Disposal of associate
Share of profit
Dividends
Carrying amount based on share in net assets of associate
OBM Financial Services Pty Ltd
Opening balance
Acquisition of associate
Share of profit
Dividends
Carrying amount based on share in net assets of associate
Rundles CountPlus Pty Ltd
Opening balance
Acquisition of associate
Share of profit
Dividends
Carrying amount based on share in net assets of associate
Rundles Financial Planning Pty Ltd
Opening balance
Acquisition of associate
Share of profit
Dividends
Carrying amount based on share in net assets of associate
2019
$’000
–
–
–
–
–
2019
$’000
–
–
–
–
–
2019
$’000
–
1,233
111
–
1,344
2019
$’000
–
2,084
56
–
2,140
2019
$’000
–
405
13
–
418
2018
$’000
2,398
(2,398)
–
–
–
2018
$’000
394
(394)
–
–
–
2018
$’000
–
–
–
–
–
2018
$’000
–
–
–
–
–
2018
$’000
–
–
–
–
–
Total carrying value of investments in associates as at 30 June
13,607
9,088
The associates had no contingent liabilities or capital commitments as at 30 June 2019 or 30 June 2018.
CountPlus Annual Report 2019 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
69
15 Trade and other payables
(a)
Current payables
Trade payables
GST payable
Sundry payables and accrued expenses
Other payables
(b)
Non-current payables
Other payables
16
Interest bearing loans and borrowings
(a)
Current interest-bearing loans and borrowings
Secured
Hire purchase liabilities
Other loans
Total current loans and borrowings
Overdraft facility
Banker’s undertaking (Lease guarantees)
Available at balance sheet date
A guarantee of the facility is provided by the parent.
2019
$’000
1,027
1,350
2,786
622
5,785
2019
$’000
108
2019
$’000
12
515
527
2019
$’000
5,000
(683)
4,317
2018
$’000
985
1,497
2,526
106
5,114
2018
$’000
75
2018
$’000
20
153
173
2018
$’000
5,000
(549)
4,451
There are no restrictions placed upon the borrower by entering into the transactions above. Details of the Group’s exposure to risks arising
from current and non-current borrowings are set out in note 35.
(b)
Non-current interest-bearing loans and borrowings
Secured
Bank loans – funding facility and other loans
Total secured non-current loans and borrowings
2019
$’000
1,228
1,228
2018
$’000
1,850
1,850
CountPlus Annual Report 2019 70
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
(c)
Financing arrangements
Unrestricted access was available at balance date to the following lines of credit:
Bilateral funding facility
Total facilities
Used at balance date
Unused at balance date
2019
$’000
24,000
24,000
(1,755)
22,245
2018
$’000
22,000
22,000
(2,023)
19,977
The interest-bearing loans and borrowings balance are $1,755,000 (Non-current: $1,228,000 Current: $527,000) (2018: Non-current: $1,850,000
Current: $153,000) borrowings from Westpac Bank.
There are currently three lines of credit with Westpac Bank.
CountPlus Limited have a revolving line of credit with Westpac Bank, the limit is currently $20,000,000 (2018: $20,000,000) and is charged
with a variable rate. This five-year facility with Westpac started on 1 December 2017. The rate is determined with reference to the Bank Bill
Swap Bid Rate (BBSY). Reference Rates are published in the Australian Financial Review plus a margin. A guarantee and charge as security
for the facility is provided by CountPlus.
Kidmans Partners Pty Ltd have a bank loan with Westpac Bank, the limit is $2,000,000 repayable over 10 years. In addition, there is a line
fee on this facility. A guarantee and charge as security for the facility is provided by Kidmans Partners Pty Ltd.
The MBA Partnership Pty Ltd have a bank loan with Westpac Bank, the limit is $2,000,000 repayable over three years. In addition, there
is a line fee on this facility. A guarantee and charge as security for the facility is provided by The MBA Partnership Pty Ltd.
(d)
Defaults and breaches
During the current and prior year, there were no defaults or breaches on any of the loans.
(e)
Significant accounting policy
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost.
Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period
of the borrowings, using the effective interest method. Fees paid on the establishment of loan facilities are recognised as transaction costs
of the loan to the extent that it is probable that some or all the facility will be drawn down. In this case, the fee is deferred until the draw down
occurs. To the extent whereby there is no evidence that it is probable that some or all the facility will be drawn down, the fee is capitalised
as a prepayment for liquidity services and amortised over the period of the facility to which it relates.
(f)
Changes in liabilities arising from financing activities
Long term borrowings
Short term borrowings
Hire purchase short term liabilities
Total liabilities from financing activities
Non-cash changes
Cash flow
$’000
Reclassification
to short term
$’000
Other changes
$’000
(107)
(153)
(8)
(268)
(515)
515
–
–
–
–
–
–
2018
$’000
1,850
153
20
2,023
2019
$’000
1,228
515
12
1,755
CountPlus Annual Report 2019 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
17 Other liabilities and contract liabilities
(a)
Other current liabilities
Deferred cash consideration for acquisition of business combination / subsidiaries*
Other current liabilities
71
2018
$’000
364
104
468
2019
$’000
340
43
383
* Deferred cash and equity consideration for acquisition relates to the acquisitions and investments made by the subsidiaries. Refer to note
30 for further information on Business combinations.
(b) Movements in deferred cash consideration for acquisition of subsidiaries
Current
At 1 July 2018
Arising during the year
Payment made during the year
Total current
Non-current
At 1 July 2018
Arising during the year
Total non-current
Total
2019
Current
Non-current
Total
2018
Current
Non-current
Total
(c)
Other non-current liabilities
Deferred cash consideration for acquisition of business combination
Security deposits and bonds
Lease make good provision
Deferred
consideration
for acquisition of
subsidiaries
$’000
364
346
(370)
340
–
108
108
448
340
108
448
364
–
364
2018
$’000
–
61
523
584
2019
$’000
108
60
433
601
CountPlus Annual Report 2019 72
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
Movements in other non-current liabilities
Movements in each category of other non-current liabilities during the financial year, are set out below:
Deferred cash
consideration
for acquisition of
subsidiaries
$’000
–
108
–
108
Security Deposits
and Bonds
$’000
Lease make good
provision
$’000
61
–
(1)
60
523
–
(90)
433
2019
$’000
916
At 1 July 2018
Acquisition of business combination / subsidiary
Payment / adjustment during the year
At 30 June 2019
(d)
Contract liabilities
Contract liabilities
Reconciliation
Reconciliation of the written down values at the beginning and end of the current and previous financial year are set out below:
Opening balance
Payments received in advance
Transfer to revenue – included in opening balance
Transfer to revenue other balances
Closing balance
(d)
Significant accounting policy
Other non-current liabilities
487
2,024
(487)
(1,108)
916
Total
$’000
584
108
(91)
601
2018
$’000
487
441
1,516
(434)
(1,036)
487
Significant accounting judgements, estimates and assumptions
Some acquisitions involve the payment of deferred consideration to vendors. This consideration is determined based on a multiple of actual
earnings over a fixed period and is dependent on revenue or client retention. Consideration payable to the vendors in relation to acquisitions
is recognised at fair value based on expected financial performance over the applicable future financial years. The component of deferred
consideration not expected to be settled within 12 months after the end of the reporting period is measured as the present value of expected
future payments to be made in respect of this deferred consideration, using a risk adjusted discount rate.
CountPlus Annual Report 2019 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
18 Provisions
(a)
Current provisions
Employee benefits – annual leave
Employee benefits – long service leave
Remediation provision
Bonus provision
Other provision
(b)
Non-current provisions
Employee benefits – long service leave
73
2018
$’000
2,081
2,245
85
308
–
4,719
2018
$’000
1,019
1,019
2019
$’000
2,200
2,253
51
543
5
5,052
2019
$’000
1,130
1,130
(c)
Significant accounting policy
Significant accounting judgements, estimates and assumptions
Employee benefits
Further disclosures relating to Key Management Personnel are set out in the remuneration report which starts on page 24 of the
Directors’ Report.
(i)
Short term obligations
Liabilities for wages and salaries, including non-monetary benefits and annual leave expected to be settled within 12 months after the
end of the period in which the employees render the related service, are recognised in respect of employees' services up to the end of the
reporting period and are measured at the amounts expected to be paid when the liabilities are settled. All short term employee benefit
obligations are presented as payables and as provisions.
(ii)
Other long term employee benefit obligations
The liability for long service leave and annual leave are not expected to be settled wholly within 12 months after the end of the period
in which the employees render the related service, is recognised in the provision for employee benefits and measured as the present
value of expected future payments to be made in respect of services provided by employees up to the end of the reporting period using
the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures
and periods of service. Expected future payments are discounted using market yields at the end of the reporting period of high-quality
corporate bonds with terms and currencies that match, as closely as possible, the estimated future cash outflows. Remeasurements as
a result of experience, adjustments and changes in actuarial assumptions are recognised in profit or loss.
The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer
settlement for at least twelve months after the reporting period, regardless of when the actual settlement is expected to occur.
(iii)
Provisions
Provisions are recognised when the economic entity has a legal, equitable or constructive obligation to make a future sacrifice of economic
benefits to other entities as a result of past transactions or other past events. It is probable that a future sacrifice of economic benefits will
be required, and a reliable estimate can be made of the amount of the obligation.
CountPlus Annual Report 2019 74
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
19 Contributed equity
(a)
Share capital
Fully paid – ordinary shares
Treasury shares – Issued capital held by loan
funded share plan (LFSP)
Capital contribution
ASX listing cost
Loan funded share plan establishment costs
2019
Shares
2018
Shares
114,222,559
(3,813,807)
–
–
–
110,408,752
114,222,559
(3,813,807)
–
–
–
110,408,752
2019
$’000
125,219
(4,983)
1,968
(586)
(35)
121,583
(b)
Fully paid ordinary shares on issue
Date
Details
Number of shares
Issue price $
1 July 2016
21 November 2016
30 June 2017
30 June 2018
30 June 2019
Opening balance
Shares issued for employee share plan
Closing balance
Closing balance
Closing balance
114,136,787
85,772
114,222,559
114,222,559
114,222,559
0.82
2018
$’000
125,219
(4,983)
1,968
(586)
(35)
121,583
$’000
125,149
70
125,219
125,219
125,219
(c)
Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Group in proportion to the number
of and amounts paid on the shares held.
On a show of hands every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each
share is entitled to one vote.
(d)
Employee share scheme
The Group has an equity scheme, under which an entitlement to loan funded shares are granted to certain employees. For further disclosure
on the Group's share plans, refer to note 34.
(e)
Capital risk management
When managing capital, the Board's objective is to ensure the Group continues as a going concern as well as to maintain optimal returns
to shareholders and benefits for other stakeholders. Management monitors the capital structure to ensure that the Group is positioned
to take advantage of favourable costs of capital or higher expected returns on assets. The Group currently has a facility of $20,000,000,
with the Westpac Bank, which has not been drawn as at 30 June 2019. The Group has an overdraft facility of $5,000,000 which was drawn
down by lease guarantees of $683,000 at 30 June 2019. In addition, there are two bank loans in Partner firms totalling $4,000,000 which
have been drawn down by $1,755,000. Future acquisitions and investments will be funded from existing and future cash flows as well
as funds received under the Group’s Owner, Driver – Partner model.
In the long term, the Group expects to maintain a dividend payout ratio of between 40% and 70% of maintainable net profit after tax
and minority interests, subject to market conditions and Group performance. The Group is not subject to any externally imposed
capital requirements.
(f)
Significant accounting policy
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.
Incremental costs directly attributable to the issue of new shares for the acquisition of a business are not included in the cost of the
acquisition as part of the purchase consideration.
CountPlus Annual Report 2019 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
20 Reserves
(a)
Reserves
Acquisition reserve
Share based payment reserve
(b) Movements in reserves
Acquisition reserve
At 1 July
Effect on reserves on account of OD-P
Transfer to accumulated losses
At 30 June
Share based payment reserve
At 1 July
Share based payment for loan funded share plan
Share based payments for long term incentive plan
At 30 June
75
2018
$’000
(52,857)
1,494
(51,363)
2018
$’000
(66,000)
835
12,308
(52,857)
1,434
60
–
1,494
2019
$’000
(48,548)
1,486
(47,062)
2019
$’000
(52,857)
–
4,309
(48,548)
1,494
–
(8)
1,486
Total reserves
(47,062)
(51,363)
(c)
(i)
Nature and purpose of reserves
Acquisition reserve
The acquisition reserve arises on the acquisition of the non-controlling interests of subsidiaries. On 1 July 2010, the Group’s interests in
15 associates were consolidated with the non-controlling interest being measured as the present ownership’s proportionate share of
identifiable net assets. The acquisition of these non-controlling interests as part of the public listing was not a business combination but
was an equity transaction between owners. Accordingly, in 2011, the difference between the consideration paid and fair value of the
identifiable net assets of the non-controlling interests has been accounted for in the acquisition reserve.
(ii)
Share based payment reserve
The share-based payments reserve records the value of shares issued to employee share trust on behalf of employees under the loan funded
share plan and the value of dividends on those shares applied to the balance of employee loans under the plan.
In addition, the reserve is used to recognise the value of equity benefits provided to the Chief Executive Officer and other Key Management
Personnel as part of their remuneration for the long term incentive plan. For further details see the remuneration report on pages 24 to 33.
CountPlus Annual Report 2019 76
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
21 Accumulated losses
At 1 July
Net profit / (loss) for the year
Transfers in
Dividends paid
At 30 June
2019
$’000
(15,439)
1,635
(3,350)
(2,258)
(19,412)
2018
$’000
(2,955)
(176)
(12,308)
–
(15,439)
22
Discontinued operations and current assets and liabilities included
in disposal group held for sale
The amounts presented in the Statement of Profit or Loss and Other Comprehensive Income in the comparative period, under discontinued
operations relate to Kidmans PEC Pty Ltd (PEC Group). The sale was finalised at the end of February 2018 and total consideration less costs to
sell amounted to $3,445,000. Consequently, assets and liabilities allocable to PEC Group and subsidiaries were classified as a disposal group.
Revenue and expenses, gains and losses relating to the discontinuation of this subgroup have been eliminated from profit or loss from the
Group’s continuing operations and are shown as a single line item on the face of the statement of profit or loss and other comprehensive
income (loss for the year from discontinued operations).
(a)
Loss for the year from discontinued operations
Profit from operations before income tax
Tax
Net profit from operations after income tax
Loss on remeasurement to fair value less costs to sell
Income tax benefit on sale
Total
Loss for the year from discontinued operations
23 Non-controlling interest
Non-controlling interest
Reconciliation of non-controlling interest in controlled entities
Reconciliation of non-controlling interest in controlled entities
At 1 July
Additional capital bought back from / issued to non-controlling interest (NCI) during the year
Disposals
Value attributed to non-controlling interest on implementation of Owner, Driver – Partner model
Share of net profit
Dividends paid by subsidiaries to non-controlling interests
At 30 June
2019
$’000
–
–
–
–
–
–
–
2019
$’000
6,007
(161)
–
–
1,321
(935)
6,232
2018
$’000
1,027
(98)
929
(2,500)
106
(2,394)
(1,465)
2018
$’000
3,688
(346)
(294)
2,601
1,023
(665)
6,007
CountPlus Annual Report 2019
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
The MBA Partnership Pty Ltd
The proportion of ownership interests (and voting rights) held by NCI
Opening NCI at 1 July
Additions
Disposals
The profit allocated to NCI for the period
Dividends paid
Closing NCI at 30 June
Specialised Business Solutions Pty Ltd
The proportion of ownership interests (and voting rights) held by NCI
Opening NCI at 1 July
Additions
Disposals
The profit allocated to NCI for the period
Dividends paid
Closing NCI at 30 June
Kidmans Partners Pty Ltd
The proportion of ownership interests (and voting rights) held by NCI
Opening NCI at 1 July
Additions
Disposals
The profit allocated to NCI for the period
Dividends paid
Closing NCI at 30 June
Robson Partners Pty Ltd
The proportion of ownership interests (and voting rights) held by NCI
Opening NCI at 1 July
Additions
Disposals
The profit allocated to NCI for the period
Dividends paid
Closing NCI at 30 June
Mogg Osborne Pty Ltd
The proportion of ownership interests (and voting rights) held by NCI
Opening NCI at 1 July
Additions
Disposals
The profit allocated to NCI for the period
Dividends paid
Closing NCI at 30 June
Total NCI at 30 June
77
2018
$’000
40.00%
1,732
–
–
667
(482)
1,917
38.70%
1,114
–
(346)
155
(145)
778
36.96%
842
378
(294)
150
–
1,076
30.00%
–
1,170
–
41
–
1,211
35.00%
–
1,053
–
10
(38)
1,025
6,007
2019
$’000
40.00%
1,917
–
–
585
(404)
2,098
38.70%
778
–
–
93
(108)
763
32.81%
1,076
–
(161)
279
(128)
1,066
30.00%
1,211
–
–
191
(137)
1,265
35.00%
1,025
–
–
173
(158)
1,040
6,232
CountPlus Annual Report 2019 78
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
The following information is provided for non-controlling interests that are material to the Consolidated entity. Figures are as per the
subsidiaries’ financial statements:
The MBA Partnership Pty Ltd
Assets
Liabilities
Revenue
Net profit
Specialised Business Solutions Pty Ltd
Assets
Liabilities
Revenue
Net profit
Kidmans Partners Pty Ltd
Assets
Liabilities
Revenue
Net profit
Robson Partners Pty Ltd
Assets
Liabilities
Revenue
Net profit
Mogg Osborne Pty Ltd
Assets
Liabilities
Revenue
Net profit
24 Dividends
2019
$’000
10,488
3,496
10,126
1,284
5,103
403
1,696
276
8,639
2,385
7,575
880
4,921
698
3,956
648
5,031
1,058
4,495
506
(a)
Dividends paid or proposed during the year on ordinary shares declared in current period
Dividends paid during the year
Interim dividend fully franked based on tax paid @ 30%, ordinary dividend paid for
the year ended
Full year dividend fully franked based on tax paid @ 30%, ordinary dividend paid for
the year ended
Dividends proposed and recognised as liability
Final dividend fully franked based on tax paid @ 30%, ordinary dividend for the year
Total dividends paid or provided for during the year
2019
$’000
1,129
1,129
–
2,258
2018
$’000
9,966
3,376
10,212
1,366
5,102
398
1,889
361
9,291
3,526
7,393
215
4,594
563
3,154
475
4,996
1,077
4,531
429
2018
$’000
–
–
–
–
CountPlus Annual Report 2019 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
(b)
Franking account balance
The franking credits available for subsequent financial years at a tax rate of 30%
79
2019
$’000
6,660
2018
$’000
6,452
The above available balance is based on the dividend franking account as at year end of reporting period, adjusted for:
(a)
(b)
(c)
franking credits that will arise from the payment of the amount of the provision for income tax;
franking debits that will arise from the payment of dividends recognised as a liability at the reporting date; and
franking credits that will arise from the receipt of dividends recognised as receivables at the end of each reporting period.
25 Remuneration of Auditors
Grant Thornton
Audit services
Audit and review of financial reports
Non-audit services
Taxation services including tax due diligence
Financial due diligence
Other advisory services*
Total remuneration for audit and other services
Total remuneration of Grant Thornton
2019
$
2018
$
320,250
384,000
92,000
259,000
383,898
1,055,148
1,055,148
–
–
–
384,000
384,000
* Other advisory services comprises of transaction advisory and governance due diligence.
26 Contingencies
(a)
Contingent liabilities
Guarantees
Guarantees given in respect of leases and premises amounted to $683,000 (2018: $637,000) for the Group. No material losses are anticipated
in respect of this guarantees.
(b)
Contingent assets
The Group has no contingent assets as at 30 June 2019 (2018: $102,000).
CountPlus Annual Report 2019
80
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
27 Commitments
(a)
Capital commitments
The Group has no capital commitments as at 30 June 2019 (2018: nil).
(b)
Lease commitments
(i)
Operating leases
The Group has entered into commercial property leases for various offices under non-cancellable lease contracts. These leases are expiring
at different times up to nine years from the reporting date. The leases are subject to different terms and conditions and rent renewals.
The Group also leases various office equipment under non-cancellable operating leases.
Minimum lease payments under non-cancellable operating leases:
Within one year
Between one and five years
Later than five years
(ii)
Finance leases
As at the reporting date, the Group has no material finance lease liabilities (2018: nil).
(c)
Significant accounting policy
Leases
2019
$’000
2,688
4,295
928
7,911
2018
$’000
3,503
5,959
1,572
11,034
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the
periods in which they are incurred.
Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.
Other operating lease payments are charged to profit or loss in the periods in which they are incurred, as this represents the pattern of
benefits derived from the leased assets. Operating lease incentives are recognised as a liability when received and subsequently reduced
by allocating lease payments between rental expense and reduction of the liability.
Payments made under operating leases (net of any incentives received from the lessor) are charged to the profit or loss on a straight-line
basis over the period of the lease.
(d)
Hire purchase commitments
The Group leases various office equipment, motor vehicles and leasehold improvements under hire purchase arrangements. The future
commitments under these categories are as follows:
Commitments in relation to hire purchase are payable as follows:
Within one year
Between one and five years
Minimum payments
Future finance charges
Total liabilities
2019
$’000
2018
$’000
8
4
12
–
12
7
8
15
–
15
CountPlus Annual Report 2019 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
81
28 Related party transactions
(a)
Parent entities
The parent entity within the Group is CountPlus Limited.
Count Financial Limited has an ownership interest in CountPlus Limited of 35.85% as at 30 June 2019 (2018: 35.85%). Count Financial Limited
is currently fully owned by the Commonwealth Bank of Australia. Colonial First State Group Limited, a subsidiary of the Commonwealth Bank
of Australia, took transfer of the 35.85% interest in CountPlus Limited on 29 August 2019.
(b)
Subsidiaries
The Group consists of the parent and its controlled entities (subsidiaries). Details of these subsidiaries are set out in note 29. Transactions
between the parent and its subsidiaries during the year consisted of:
Î
Î
Î
the loans advanced by the parent to subsidiaries;
the payment of dividends to the parent by subsidiaries; and
the remittance of profits to the parent by subsidiaries.
At year end, all loan balances, payment of dividends and the remittance of profits between the parent and these subsidiaries were
eliminated on consolidation.
(c)
Key Management Personnel
Short term employee benefits
Post-employment benefits
Long term benefits
Share-based payments
2019
$’000
1,879,946
102,771
–
24,653
2,007,370
2018
$’000
1,302,422
67,789
1,134
13,694
1,385,039
Further disclosures relating to the Key Management Personnel are set out in the Directors’ report on pages 28 to 29.
(d)
Transactions with related parties
The following transactions occurred with related parties:
Sales of goods and services
Net fees and commissions received from Count Financial
2019
$’000
2018
$’000
11,402
13,313
Thirteen of the fourteen subsidiaries, and one of the associates of the Group were franchisees of Count Financial during the period and
operate under their Australian Financial Services Licence. Fees and commissions received from Count Financial for the provision of financial
planning services are either paid by Count Financial to these subsidiaries or paid by investment platform operators who are authorised
by Count Financial to pay directly to these subsidiaries. Included in the net fees and commission received from Count Financial is income
received by CountPlus Limited under a ‘Relationship Deed’ agreement.
CountPlus Limited entered into a ‘Relationship Deed’ agreement with Count Financial on 4 November 2010. Count Financial granted
CountPlus ‘Most Favoured Nation Status’ (MFN Status). This means that in relation to an existing or new Count Product or Service, except for
Platform and Asset Financing Revenue, Count will offer the CountPlus Group the best terms for the existing or new Count Product or Service
which is available by the Count Group to any other member of the Count Group. Count will pay CountPlus 50% of the Platform Revenue
received by Count from a Preferred Platform Provider in respect of CountPlus FUM with that Platform Provider. Count will pay CountPlus 50%
of any revenue received from an Asset Financier in relation to Asset Financing for CountPlus’ clients, customers and associates. CountPlus
received fees and commissions of $1,200,000 (2018: $1,280,000) from Count Financial in accordance with the terms set out in the Relationship
Deed. On 22 December 2015, an amendment to the ‘relationship Deed’ was signed. The purpose of this amendment was to clarify and ensure
compliance with the FOFA provisions set out in the Corporations Act.
CountPlus Annual Report 2019 82
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
Premises expenses 1
Catalyst Finance Pty Ltd 2
The Southport Unit Trust 3
Rosebead Pty Ltd4
Brinfields Superannuation Fund
Mark & Bronwyn Kenmir Superannuation Fund 5
Bronwyn Kenmir 6
Cummings and West Super Fund 7
2019
$’000
2018
$’000
255
317
61
–
29
43
37
742
206
345
59
38
28
40
63
779
1.
2.
3.
4.
5.
Premises expenses with related parties are set and maintained at commercial rates, with reviews carried out per the terms
of standard contracts.
Catalyst Finance Pty Ltd is an unlisted entity controlled by Mr D Glover, Mr C Bartlett and Ms J Beverley. Mr D Glover, Mr C Bartlett
and Ms J Beverley are also the principals of Evolution Advisers Pty Ltd, a wholly owned subsidiary of the parent entity.
Mr M Beddoes and Mr G Missen are directors of MBA Bookkeeping Pty Ltd, the trustee for the Southport Unit Trust.
Both Mr M Beddoes and Mr G Missen are principals of The MBA Partnership Pty Ltd, a 60% owned subsidiary of the parent entity.
Rosebead Pty Ltd is an unlisted entity and the trustee for the Muttama Superannuation Fund. Mr M Twomey, Mr G Twomey,
Ms R Twomey, and Ms M Twomey are joint beneficiaries of the Muttama Superannuation Fund. Mr M Twomey is a principal of
Twomeys Pty Ltd, a wholly owned subsidiary of the parent entity. Mr G Twomey and Ms M Twomey are employees of Twomeys Pty Ltd.
The Mark and Bronwyn Kenmir Superannuation Fund is the SMSF of Mr Mark Kenmir, the principal of Cooma Accounting and
Financial Services Pty Ltd.
6. Ms Bronwyn Kenmir is wife of Mr Mark Kenmir, the principal of subsidiary, Cooma Accounting and Financial Services Pty Ltd.
7.
Cummings and West Super Fund is an unlisted entity controlled by Ms Julie West. Ms Julie West is a principal and part owner
of subsidiary The MBA Partnership (NSW) Pty Ltd.
(e)
Outstanding balances arising from transactions with related parties
The following balances are outstanding at the end of the reporting period in relation to transactions with related parties:
Current receivables
Receivable from Count Financial Limited
2019
$’000
228
2018
$’000
229
CountPlus Annual Report 2019 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
83
29 Subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following subsidiaries in accordance with
accounting policy described in note 30.
Name of entity
1.
The MBA Partnership Pty Ltd*
Î Digital O2 Pty Ltd
Î MBA Financial Services (Rawsons) Pty Ltd
Î The MBA Partnership (NSW) Pty Ltd
2.
3.
Twomeys Pty Ltd*
Bentleys (WA) Pty Ltd*
Î Bentleys Advisory (WA) Pty Ltd
Î Bentleys Corporate Finance (WA) Pty Ltd
Î Australian Superannuation & Compliance Pty Ltd
4. Addvantage Financial Freedom Pty Ltd*
Î Addvantage Accountants Pty Ltd
Î Cooma Accounting and Financial Services Pty Ltd
Î Beams & Associates Pty Ltd
5.
Specialised Business Solutions Pty Ltd*
6. Mogg Osborne Pty Ltd*
7.
Crosby Dalwood Pty Ltd*
8. Cooper Reeves Pty Ltd*
9. CountPlus One Pty Ltd*
10. Evolution Advisers Pty Ltd*
11. Robson Partners Pty Ltd*
12. Kidmans Partners Pty Ltd*
13.
360 Financial Advantage Pty Ltd*
14. CountPlus FS Holdings Pty Ltd (TFS Group)*
Î Total Financial Solutions Australia Ltd
Î TFS Operations Pty Ltd
Î TFS Advice Pty Ltd
15. Kidmans PEC Pty Ltd
16. BLUE789 Pty Ltd
17. ADVICE389 Pty Ltd
Principal place
of business / Country
of Incorporation
Percentage Owned
(%)*
2019
Percentage Owned
(%)*
2018
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
60.00
100.00
70.00
51.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
61.28
65.00
100.00
100.00
100.00
100.00
70.00
67.19
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
60.00
100.00
70.00
51.00
100.00
100.00
0.00
0.00
100.00
100.00
100.00
100.00
100.00
61.28
65.00
100.00
100.00
100.00
100.00
70.00
63.04
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
* These subsidiaries are separate cash generating units.
These entities are consolidated into the respective cash generating units (CGUs) identified above. The class of shares acquired for all the
subsidiaries are ordinary shares.
(a)
Significant restrictions relating to subsidiaries
There are no statutory, contractual or regulatory restrictions on any of the subsidiary’s ability to access or transfer or use its assets and settle
the liabilities of the Group.
There are no guarantees given or other requirements that may restrict dividends and other capital distributions being paid, or loans and
advances being made or repaid to (or from) other entities within the Group.
(b)
Consolidated structured entities
The Group does not have any consolidated structured entities other than the ones which are consolidated in these financial statements
and listed as subsidiaries above.
CountPlus Annual Report 2019 84
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
30 Business combinations
(a)
Significant accounting policy
Business combinations
The acquisition method of accounting is used to account for all business combinations, including business combinations involving entities
or businesses under common control, regardless of whether equity instruments or other assets are acquired. The consideration transferred
for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred, and the equity interests issued
by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value
of any pre-existing equity interest in the subsidiary. Acquisition related costs are expensed as incurred. Business combinations are initially
accounted for on a provisional basis until either the earlier of (i) 12 months from the date of acquisition or (ii) the finalisation of fair value.
On an acquisition by acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-
controlling interest's proportionate share of the acquiree’s net identifiable assets.
If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the
acquiree is remeasured at fair value at the acquisition date through profit or loss.
The excess of the consideration transferred and the amount of any non-controlling interests in the acquiree over the fair value of the net
identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary
acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase.
The Group has measured the non-controlling interest at the acquiree's share of the identifiable net assets. Accordingly, goodwill arising on
consolidation represents only CountPlus’ proportionate share of goodwill at the date of acquisition. Key factors contributing to goodwill are
synergies existing within the acquired businesses, superior management and superior service offerings. None of the goodwill recognised
is expected to be deductible for tax purposes.
Contingent consideration is classified as financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value
with changes in fair value recognised in profit or loss.
(b)
Current period
Summary of acquisitions
On 1 April 2019, CountPlus subsidiary 360 Financial Advantage Pty Ltd acquired 100% of the business assets of Kerry Albert & Co.
A cash consideration of $757,075 was paid on settlement. The total consideration for the acquisition is $1,205,360.
Contribution since acquisition
Revenue
Net profit
Net assets acquired
Acquired client relationships
Goodwill arising on acquisition
Acquisition date fair value
Cash paid
Contingent cash consideration
Total consideration
Kerry Albert & Co
Fair value
$’000
249
37
442
763
1,205
757
448
1,205
(c)
Contribution of entities acquired during the period
The above listed acquisition made during financial year 2019 contributed revenue of $249,000 and a net profit of $37,000 respectively,
to the Consolidated Profit or Loss and Statement of Other Comprehensive Income. Had the acquisition occurred at the beginning of the
reporting period, the Consolidated Profit or Loss and Statement of Other Comprehensive Income would have included revenue and net
profit of approximately $996,000 and $148,000 respectively.
(d)
After the reporting period
Other than the acquisition of Count Financial Limited, as disclosed in note 31, no business combinations were completed after the end of the
reporting period. In instances where this does happen, during the measurement period, these acquisitions will be provisionally accounted
for until purchase price accounting is finalised, at which point the financial effects of these business combinations will be fully disclosed.
CountPlus Annual Report 2019 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
85
31 Events occurring after the reporting date
On 13 June 2019, CountPlus Limited, together with a special purpose subsidiary of a discretionary trust established by CountPlus for benefit
of Count member firms (CMFT), entered into an agreement to acquire Count Financial Limited (Count Financial). CountPlus will hold 85% and
CMFT will hold 15% of Count Financial. The transaction was approved by shareholders on 6 August 2019 and will complete on 1 October 2019,
which will be the date on which CountPlus obtains control of Count Financial.
No matter or circumstance has arisen since 30 June 2019 other than the Count Financial transaction and the final dividend for the financial
year 2019 which was approved by the Board after financial year end 30 June 2019, that has significantly affected, or may significantly affect:
(a)
(b)
(c)
the Group’s operations in future financial years, or consolidated entity;
the results of those operations in future financial years; or
the Group’s state of affairs in future financial years. Other than the following:
On 26 August 2019, the Directors resolved to declare a full year final dividend for FY19 of 1 cent (fully franked) to be paid on 16 October 2019
(Record date 27 September 2019).
32
Reconciliation of profit after income tax to net cash inflow from
operating activities
Net profit from operations after income tax for the year
Non-cash items in profit
Depreciation and amortisation
TFS write back of provision
Gain on disposal of product
Share based payments
(Reversal) of impairment / impairment of receivables
Loss on disposal of Kidmans PEC Pty Ltd
Gain on deferred consideration
Investment Income
Share of associates net profit
Net (gain) / loss on disposal of assets
Make good provision
Impairment of goodwill
Gain on revaluation of Class Limited shares
Changes in operating assets and liabilities
Decrease in trade and other receivables
Decrease in contract assets
Increase / (Decrease) in trade and other payables
Decrease in income taxes payable
Decreases in net deferred taxes liabilities
Decrease / (Increase) in employee and other provisions
Net cash inflow from operating activities
Add net cash inflow from operating activities from discontinued operations
Net cash inflow from operating activities from continuing operations
2019
$’000
2,956
2,287
–
(1,000)
(8)
(103)
–
–
–
(1,553)
(99)
(91)
1,060
–
57
818
1,078
395
(292)
444
5,949
–
5,949
2018
$’000
847
2,912
(729)
–
60
333
2,394
(271)
(2,225)
(828)
36
–
4,700
(33)
9,027
23
(7,987)
92
(2,030)
(1,527)
4,794
259
5,053
CountPlus Annual Report 2019
86
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
33 Earnings per share
(a)
Earnings per share
Basic and diluted earnings / (loss) per share
From continuing operations attributable to the ordinary owners of the Group
From discontinued operations
Total basic and diluted earnings / (loss) per share attributable to the owners of the Group
2019
Cents
1.48
–
1.48
(b)
Reconciliation of earnings to profit or loss from continuing operations and discontinued operations
Profit from continuing operations
Profit attributable to non-controlling equity interest in respect of continuing operations
Earnings used to calculate basic and diluted EPS from continuing operations
Loss from discontinued operations
Loss attributable to non-controlling equity interest in respect of continuing operations
Loss used to calculate basic and diluted EPS from discontinued operations
(c)
Earnings used to calculate earnings per share
Profit / (loss) attributable to the ordinary owners of the Group used in calculating
basic and diluted EPS
2019
$’000
2,956
(1,321)
1,635
2019
$’000
–
–
–
2019
$’000
1,635
2018
Cents
1.17
(1.33)
(0.16)
2018
$’000
2,312
(1,023)
1,289
2018
$’000
(1,465)
–
(1,465)
2018
$’000
(176)
(d) Weighted average number of ordinary shares outstanding during the year used in calculating basic EPS
Number of ordinary shares outstanding
Loan funded share plan
Weighted average number of ordinary shares outstanding during the year used
in calculating basic and dilutive EPS
(e)
Significant accounting policy
Basic earnings per share is calculated by dividing
2019
Number
114,222,559
(3,813,807)
2018
Number
114,222,559
(3,813,807)
110,408,752
110,408,752
Î
the profit attributable to owners of the Group, excluding any costs of servicing equity other than ordinary shares; and
Î by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary
shares issued during the year and excluding treasury shares.
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to consider
Î
Î
the after-income tax effect of interest and other financing costs associated with dilutive potential ordinary shares; and
the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive
potential ordinary shares.
CountPlus Annual Report 2019 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
87
34 Share plans
(a)
Loan funded share plan
Long term incentive awards are delivered to employees in the form of a loan funded share plan (LFSP). Under the plan, employees who
have contributed to Group performance may be granted an allocation of loan-funded shares which are held on their behalf by an employee
share trust.
A summary of the Group shares issued up to the year ended 30 June 2019 are as follows:
Description Grant date
Expiry date
Exercise
price
Start of
the year
Granted
during
the year
Exercised
during
the year Forfeited
Expired
Balance
at end
of the
year
Vested and
exercisable
at end of
the year
LFSP 2013
LFSP 2014
15 January 2013
15 January 2014
14 January 2016
14 January 2017
LFSP 2015
2 March 2015
1 March 2018
LFSP 2016
21 December 2015
20 December 2018
LFSP 2017
16 November 2016 15 November 2019
1.50
1.87
486,889
693,017
1.12 1,789,044
0.95
0.82
69,168
80,773
–
–
–
–
–
–
–
–
–
–
–
–
(486,889)
(693,017)
– (1,789,044)
(69,168)
(80,773)
–
–
–
–
–
–
–
–
–
–
–
–
(b)
Employee loyalty equity plan
During the 2019 and 2018 financial year no shares were issued under the employee loyalty equity share plan.
(c)
Long term incentive plan
The long term incentive plans are set out on pages 31 to 33 of this report.
35 Financial Risk Management
The Group’s principal financial assets and liabilities, which arise directly from its operations, comprise of cash and cash equivalents, trade
and other receivables, work in progress, investment in associates, interest bearing loans, borrowings, trade and other payables.
The main risks arising from the Group’s financial instruments (financial assets and liabilities) are market risk (including price risk and interest
rate risk), liquidity risk and credit risk. The Group has not entered into any derivative contracts as means to hedge against these risks.
The Board of Directors reviews and agrees policies for managing each of these risks, which are summarised below:
(a) Market risk
(i)
Price risk
During the prior financial year, the Group disposed of its remaining equity securities in Class Limited on 5 September 2017. The Group has
no further price risk exposure following the sale of these securities.
(ii)
Interest rate risk
The Group’s risk exposure to changes in market interest rates relates primarily to long term borrowings under a variable rate arrangement.
In December 2017, CountPlus entered into a variable rate, 5-year revolving line of credit facility with a limit of $20,000,000. As at reporting
date, $20,000,000 of the facility remains undrawn. In addition, there are two bank loans in Partner firms totalling $4,000,000 which have
been drawn down in total by $1,755,000. The Group has an overdraft facility of $5,000,000 which was drawn down by lease guarantees
of $683,000 at 30 June 2019. These facilities are with the Westpac Bank. The Group has not entered into any hedging or other contracts
to mitigate this risk.
Lease liabilities and hire purchase liabilities are guaranteed or indemnified by the relevant Directors, the subsidiary or CountPlus Limited.
The Group’s borrowings are backed with guarantees.
At 30 June 2019, the effect on profit as a result of changes in the interest rate, with all other variables remaining constant would be as follows:
Change in profit
+1% (100 basis points)
–1% (100 basis points)
2019
$’000
(40)
40
2018
$’000
(65)
65
CountPlus Annual Report 2019 88
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
(b)
Credit risk
The Group is exposed to credit risk from its operating activities (primarily trade and other receivables) and from its investing and financing
activities (primarily, investment in associates, other investments and guarantees held by financial institutions, as disclosed in notes 14 and
26 respectively).
The Group trades only with creditworthy third parties, and as such collateral is not requested nor is it the Group’s policy to securitise its trade
and other receivables. There are no significant concentrations of credit risk within the Group and financial instruments are spread amongst
several counterparties to spread the risk of default of counterparties.
The Group’s exposure to credit risk arises from potential default of the counterparty, with a maximum exposure equal to the carrying amount
of these instruments, as indicated in the consolidated statement of financial position. The maximum credit risk exposure does not consider
the value of any collateral or other security held, in the event other entities / parties fail to perform their obligations under the financial
instruments in question. In addition, receivable balances are monitored on an ongoing basis. The Group observes its provision policy.
Acquisitions are undertaken only with approved counterparties after undertaking and extensive due diligence process. The investment
decisions are reviewed by the Group’s acquisition committee and Board of Directors. The Group’s maximum exposure to credit risk is the
carrying amount of these investments, as indicated in the consolidated statement of financial position.
(c)
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its debt obligations, or other cash outflows, as they fall due because of lack
of liquid assets or access to adequate funding on acceptable terms. The Group monitors its liquidity position on a regular basis to ensure
that there is adequacy to meeting obligations.
Financing arrangements
The Group had access to the following undrawn borrowing facilities at the end of each reporting period:
Floating rate
Expiring within one year
Expiring beyond one year
Total
2019
$’000
–
26,562
26,562
2018
$’000
–
28,803
28,803
CountPlus Annual Report 2019 Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
89
36 Fair Value Measurement
The carrying amounts of cash and cash equivalents, trade and other receivables, trade and other payables and borrowings approximate
their fair value.
The fair value of financial assets and financial liabilities must be estimated for recognition and measurement or for disclosure purposes.
The Group uses various methods in estimating the fair value of a financial instrument. The methods comprise:
Level 1
the fair value is calculated using quoted prices in active markets.
Level 2
Level 3
the fair value is estimated using inputs other than quoted prices included in Level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices).
the fair value is estimated using inputs for the asset or liability that are not based on observable market data. The fair value
of the financial instruments held by the Group are summarised in the table below.
2019
Financial liabilities
Contingent cash consideration
Total
2018
Financial liabilities
Contingent cash consideration
Total
Level 1
$'000
Level 2
$'000
Level 3
$'000
–
–
–
–
(448)
(448)
Level 1
$'000
Level 2
$'000
Level 3
$'000
–
–
–
–
(364)
(364)
Total
$'000
(448)
(448)
Total
$'000
(364)
(364)
The fair value of the financial assets and liabilities represents the price that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date. The following methods and assumptions were used to
estimate the fair values.
Fair value of other investments held at fair value through profit and loss is determined based on observable market transactions. Observable
market transactions considered are those transactions which occurred on 30 June 2019, excluding new issue of shares. The fair value is
calculated by multiplying the total number of shares outstanding by the market price.
Fair value of contingent cash consideration is derived from management expectations of the performance of the acquired businesses
and assets.
Fair value of deferred equity consideration is derived from management expectations of the performance of the acquired businesses
and assets.
The maximum potential payment for deferred consideration is $448,000 (2018: $364,000).
Management believes no reasonable change in any other key assumptions would have a material impact on the fair value of other
investments and contingent consideration.
Level 3 measurements
A reconciliation of the movements in recurring fair value measurements allocated to Level 3 of the hierarchy is provided below:
Balance at beginning of year
Total gains or losses for the year
Gain on deferred consideration recognised in profit or loss
Other movements
Additions to deferred cash & equity consideration for acquisitions of assets during the year
Adjustments
Cash paid for settlement of deferred cash consideration
Balance at end of year
2019
$’000
(364)
–
(448)
(6)
370
(448)
CountPlus Annual Report 2019 90
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
37 Parent entity
(a)
Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Statement of Financial Position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Share based payment reserve
Accumulated losses
Statement of Profit or Loss and Other Comprehensive Income
Loss for the year
Total Comprehensive Loss
2019
$’000
4,352
55,350
59,702
(1,191)
(26)
(1,217)
58,485
126,552
1,486
(69,553)
58,485
(2,491)
(2,491)
2018
$’000
6,465
52,928
59,393
(993)
(113)
(1,106)
58,287
126,552
1,494
(69,759)
58,287
(32,242)
(32,242)
(b)
Guarantees entered into by parent entity
The parent entity has not provided any financial guarantees in respect of bank overdrafts or loans of subsidiaries.
(c)
Contingent liabilities of the parent entity
The parent entity did not have any contingent liabilities as at 30 June 2019 or 30 June 2018.
(d)
Contractual commitments for acquisition of property, plant and equipment
The parent entity did not have any commitments as at 30 June 2019 or 30 June 2018.
(e)
Parent entity financial information
The financial information for the parent entity, CountPlus Limited, disclosed above have been prepared on the same basis as the
consolidated financial statements, except as set out below.
(i)
Investments in subsidiaries, associates and joint venture entities
Investments in subsidiaries, associates and joint venture entities are accounted for at the lower of cost and recoverable value in the financial
statements of CountPlus Limited. Dividends received from associates are recognised in the parent entity’s profit or loss, rather than being
deducted from the carrying amount of these investments.
(ii)
Tax consolidation legislation
CountPlus Limited (‘the Corporate Entity’) and its 100% owned Australian subsidiaries formed an income tax consolidation group with effect
from 5 November 2010. Subsidiaries joined the tax consolidation group from the date they became wholly owned. The Corporate Entity
and the controlled entities in the tax consolidated group account for their own current and deferred tax amounts. These tax amounts are
measured as if each entity in the tax consolidated group continues to be a standalone taxpayer.
Members of the CountPlus tax consolidation group entered into a tax sharing and funding agreement. Under the terms of this agreement,
each member in the tax consolidation group agreed to make a tax equivalent payment to the Corporate Entity based on their current tax
liability or current tax asset. Deferred taxes are recorded by members of the tax consolidation group in accordance with the principles
of AASB 112 Income Taxes.
CountPlus Annual Report 2019
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
91
(iii)
Financial guarantees
Where the parent entity has provided financial guarantees in relation to loans and payables of subsidiaries for no compensation, the fair
values of these guarantees are accounted for as contributions and recognised as part of the cost of the investment.
The Group currently has banking facilities with Westpac Bank. These comprise a $5,000,000 revolving line of credit facility and a $20,000,000
Bank Bill Business Loan. These were undrawn at year end except for the bank undertaking for property leases of $683,000. A subsidiary
of CountPlus Limited, Kidmans Partners Pty Ltd currently has a bank loan of $2,000,000 with Westpac Bank. The MBA Partnership Pty Ltd
currently has a bank loan of $2,000,000, with Westpac Bank. These two loans were drawn down by $1,755,000 in total at 30 June 2019.
(iv)
Share based payments
The grant by the Group of options over its equity instruments to the employees of a subsidiary in the Group is treated as a capital
contribution to the relevant subsidiary. The fair value of employee services received, measured by reference to the grant date fair value,
is recognised over the vesting period as an increase to investment in subsidiaries, with a corresponding credit to equity.
38 Critical Accounting Estimates and Judgements
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations
of future events that may have a financial impact on the entity and that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The result may be different from the estimated amounts.
The estimates and assumptions that have a significant risk of causing a material misstatement which would result in an adjustment to the
carrying amounts in the Statement of Financial Position are as follows:
(a)
Impairment
At each reporting date, the Group reviews the recoverable amount of its tangible and intangible assets to determine whether there is any
indication that these assets may be impaired. If such an indication exists, the recoverable amount of the asset, assessed as the higher of
its fair value less costs to sell and its value in use, is compared to its current carrying amount. Any excess of the asset’s carrying value over
its recoverable amount is expensed in the statement of profit or loss.
The Group determines whether goodwill is impaired at least on an annual basis. This requires estimation of the recoverable amount of the
CGU by determining the value in use of each individual CGU.
Acquired client relationships are tested for impairment whenever there is an indication that the intangible asset may be impaired. This
assessment is made at least on an annual basis. The net carrying value is compared with the expected future benefits from the relationships
for each cash generating unit. If the carrying value of the relationships is higher than the expected future benefits an impairment loss is
recorded for the difference.
(b)
Allowance for expected credit losses of receivables
Where receivables are outstanding beyond the normal trading terms, the recovery likelihood of these receivables is assessed and reviewed
by management. Outstanding debts that are deemed to be uncollectable are written off when identified. Historical experience and
information of the Group’s client base are considered when determining the provision for impairment loss.
(c)
Allowance for expected credit losses of contract assets
The recoverability of Contract assets are assessed and reviewed by management on a regular basis. Any amounts in excess of net recoverable
value are written off when identified. Historical experience and information of the Group’s client base are considered when determining the
provision for impairment loss.
(d)
Provision for make good
A provision has been made for the present value of anticipated costs of future restoration of various leased office premises. The provision
includes future cost estimates associated with refurbishment to restore the leased premises to their original conditions. Provision recognised
for each office is measured at management’s best estimate of the expenditures where it is probable that an outflow of resources will be
required. Changes to the estimated future costs for sites are recognised in the statement of financial position by adjusting both the expense
or asset (if applicable) and provision.
CountPlus Annual Report 2019 92
Notes to the Consolidated Financial Statements
For the Year Ended 30 June 2019
(e)
Contingent consideration
Some acquisitions involve the payment of contingent consideration to vendors. This consideration is determined based on a multiple
of actual earnings over a fixed period and is dependent on revenue or client retention. Consideration payable to the vendors in relation to
acquisitions is recognised at fair value based on expected financial performance over the applicable future financial years. The component
of contingent consideration not expected to be settled within 12 months after the end of the reporting period is measured as the present
value of expected future payments to be made in respect of this contingent consideration, using a risk adjusted discount rate.
(f)
Loan funded share plan
Loan funded shares are assessed as substantively like options for the purposes of valuation as the loan is non-recourse and the shares are
subject to vesting conditions. None of these shares are due to vest for the 2013–2017 loan funded share plan as the vesting conditions have
not been met.
(g)
Deferred taxes
The Consolidated entity is subject to taxes in Australia. The application of tax law to the specific circumstances and transactions of the
Consolidated entity requires the exercise of judgement by management. The tax treatments adopted by management in preparing the
financial statements may be impacted by changes in legislation and interpretations or be subject to challenge by tax authorities.
CountPlus has recognised a deferred tax asset on tax capital losses. CountPlus plans to continue with the successful Owner, Driver – Partner
model which is expected to result in transactions with core firms over the next two to three years. A consequence of these transactions
is likely to create taxable capital gains. The envisaged structure of most of the transactions, being share sale transactions, are subject to pre-
defined financial hurdles being met by firms. Both the structure of the transactions and the potential increase in value in the firms are likely to
give rise to taxable capital gains which the Group has concluded will result in the deferred tax assets being utilised in the foreseeable future.
CountPlus Annual Report 2019 Directors' Declaration
93
1.
In the opinion of the Directors of CountPlus Limited:
a. The consolidated financial statements and notes of CountPlus Limited are in accordance with the Corporations Act 2001, including
i.
Giving a true and fair view of its financial position as at 30 June 2019 and of its performance for the financial year ended on that
date; and
ii. Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations
Regulations 2001.
b.
There are reasonable grounds to believe that CountPlus Limited will be able to pay its debts as and when they become due and
payable.
2.
The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Officer
and Chief Financial Officer for the financial year ended 30 June 2019.
3.
Note 2 confirms that the consolidated financial statements also comply with International Financial Reporting Standards.
Signed in accordance with a resolution of the Board of Directors.
Ray Kellerman
Chairman
Sydney
6 September 2019
CountPlus Annual Report 2019
94 Independent Auditor’s Report
To the members of CountPlus Limited
Level 17, 383 Kent Street
Sydney NSW 2000
Correspondence to:
Locked Bag Q800
QVB Post Office
Sydney NSW 1230
T +61 2 8297 2400
F +61 2 9299 4445
E info.nsw@au.gt.com
W www.grantthornton.com.au
Independent Auditor’s Report
To the Members of CountPlus Limited
Report on the audit of the financial report
Opinion
We have audited the financial report of CountPlus Limited (the Company) and its subsidiaries (the Group), which
comprises the consolidated statement of financial position as at 30 June 2019, the consolidated statement of profit or loss
and other comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows
for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting
policies, and the Directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the Corporations Act 2001, including:
a giving a true and fair view of the Group’s financial position as at 30 June 2019 and of its performance for the year
ended on that date; and
b complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Report section of our report. We are
independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and
the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for
Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled
our other ethical responsibilities in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Grant Thornton Audit Pty Ltd ACN 130 913 594
a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389
www.grantthornton.com.au
‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients
and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International
Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are
delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one
another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to
Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to
Grant Thornton Australia Limited.
Liability limited by a scheme approved under Professional Standards Legislation.
CountPlus Annual Report 2019
Independent Auditor’s Report
To the members of CountPlus Limited
95
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
report of the current period. These matters were addressed in the context of our audit of the financial report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
Recoverable amount of intangible assets
(Note 13)
As at 30 June 2019, the Group’s intangible assets of
$33,173,000 consist of goodwill, acquired client
relationships/advisor networks, IT software and other
intangible assets. An impairment expense of $1,060,000 has
been recognised during the year.
AASB 136: Impairment of Assets requires that, for the
purposes of impairment testing, goodwill acquired in a
business combination be allocated to each of the Group’s
cash-generating units (CGU). Each CGU to which goodwill
has been allocated must be tested for impairment annually.
Management have assessed that the group has 14 CGUs,
and has allocated the goodwill and other intangible assets to
each of these CGUs.
Management have tested the CGUs for impairment by
comparing their carrying amounts with their recoverable
amounts. The recoverable amounts were determined using
value-in-use models.
We have determined this is a key audit matter due to the
judgements and estimates required in determining the
appropriate CGUs and calculating the recoverable amount.
Our procedures included, amongst others:
Enquiring with management to obtain and document an
understanding of their processes and controls related to the
assessment of impairment, including identification of CGUs
and the calculation of the recoverable amount for each
CGU;
Obtaining management’s value in use calculations to:
-
-
-
-
Test the mathematical accuracy;
Evaluate management’s ability to perform accurate
estimates by comparing historical forecasting to
actual results;
Test forecast cash inflows and outflows to be derived
by the CGUs’ assets; and
Agree discount rates applied to forecast future cash
flows;
Evaluating the value in use models against the
requirements of AASB 136, including consultation with our
valuations experts;
Performing sensitivity analysis on the significant inputs and
assumptions made by management in preparing the
calculation; and
Assessing the adequacy of financial report disclosures.
Information other than the financial report and auditor’s report thereon
The Directors are responsible for the other information. The other information comprises the information included in the
Group’s annual report for the year ended 30 June 2019, but does not include the financial report and our auditor’s report
thereon.
Our opinion on the financial report does not cover the other information and we do not express any form of assurance
conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or
otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact. We have nothing to report in this regard.
CountPlus Annual Report 2019
96 Independent Auditor’s Report
To the members of CountPlus Limited
Responsibilities of the Directors for the financial report
The Directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in
accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors
determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material
misstatement, whether due to fraud or error.
In preparing the financial report, the Directors are responsible for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial report
Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing
Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of this financial report.
A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance
Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our
auditor’s report.
Report on the remuneration report
Opinion on the remuneration report
We have audited the Remuneration Report included in pages 24 to 33 of the Directors’ report for the year ended 30 June
2019.
In our opinion, the Remuneration Report of CountPlus Limited for the year ended 30 June 2019 complies with section
300A of the Corporations Act 2001.
Responsibilities
The Directors of the Company are responsible for the preparation and presentation of the Remuneration Report in accordance
with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing Standards.
Grant Thornton Audit Pty Ltd
Chartered Accountants
C F Farley
Partner – Audit & Assurance
Sydney, 6 September 2019
CountPlus Annual Report 2019
ASX Additional Information
97
Additional information required by the Australian Stock Exchange Limited and not shown elsewhere in this report is as follows:
(a)
Distribution of Equity Securities
The number of shareholders, by size of holding, in each class of shares as at 31 August 2019 are:
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 – and over
Total
Holding less than a marketable parcel – 110 holders.
(b)
Twenty Largest Shareholders
The names of the twenty largest holders of quoted shares as at 31 August 2019 are:
Colonial First State Group Limited
J P Morgan Nominees Australia Pty Limited
HSBC Custody Nominees (Australia) Limited
Pacific Custodians Pty Limited (Employee Share Tst A/C)
Mr Barry Martin Lambert
Citicorp Nominees Pty Limited
National Nominees Limited
Santos L Helper Pty Ltd (SBS Van Paassen A/C)
Mrs Joy Wilma Lillian Lambert
1.
2.
3.
4.
5.
6.
7.
8.
9.
10. Avanteos Investments Limited (7749080 Jonathan A/C)
11.
12. Harvey Investment Company Pty Ltd (Seastar Investment A/C)
13. Mr Michael Allan Beddoes (Beddoes Practice A/C)
14. Mr Joseph Zanca and Mrs Szerenke Zanca (Zanacorp Super Fund A/C)
15.
BNP Paribars Nominees Pty Ltd (IB AU NOMS Retailclient DRP)
16. Mr Barry Martin Lambert
17.
RK Sydney Pty Ltd (RK Family A/C)
18. Zanacorp Financial Group Pty Ltd
19. Mr John William Officer and Mrs Jennifer Catherine Officer (Officer Super Fund A/C)
20.
Rowe Heaney Super Fund Pty Ltd (Rowe Heaney Super Fund A/C)
Supergeneration Pty Ltd (Supergeneration A/C)
Totals: Top 20 holders of issued capital (total)
(c)
Substantial Shareholders
As at the date of this report, the substantial shareholder is:
Ordinary shareholder
Colonial First State Group Limited
Listed Ordinary Shares – Fully Paid
Number of Holders
Number of Shares
426
728
344
590
101
257,934
1,999,914
2,734,123
17,851,379
91,379,209
2,189
114,222,559
Listed Ordinary Shares – Fully Paid
Number of Shares
Percentage
40,945,747
4,407,421
4,351,860
3,813,807
3,300,000
3,022,928
2,369,252
2,100,000
1,333,333
1,162,528
1,148,598
835,561
800,000
787,500
781,835
764,729
750,000
607,500
537,899
533,600
74,354,098
35.85
3.86
3.81
3.34
2.89
2.65
2.07
1.84
1.17
1.02
1.01
0.73
0.70
0.69
0.68
0.67
0.66
0.53
0.47
0.47
65.11
Listed Ordinary Shares – Fully Paid
Number
Percentage
40,945,747
35.85%
CountPlus Annual Report 2019 98
Investors' Information
Share Trading
Voting Rights
At a General Meeting, every member present in person or by proxy
or attorney, or in the case of a corporation by a representative duly
authorised under the seal of that corporation, has one vote on a
show of hands and in the event of a poll, one vote for each fully paid
ordinary share held by the member. Options carry no voting rights.
CountPlus Limited’s fully paid ordinary shares are listed on
the Australian Stock Exchange (ASX) and are traded under the
code CUP.
Shareholders’ Enquiries
Investors seeking information regarding their shareholding or
wishing to change their address, should contact our share registry:
Computershare Investor Services Pty Ltd
Address
Telephone
Fax
Level 3, 60 Carrington Street
Sydney NSW 2000
1300 850 505
+61 2 8234 5000
+61 2 8235 8150
Any other enquiries relating to CountPlus Limited can be directed
to CountPlus at:
Postal Address
Telephone
Email
GPO Box 1453
Sydney NSW 2001
+61 2 8488 4500
info@countplus.com.au
CountPlus Annual Report 2019
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ANNUAL REPORT
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