# CUP - Countplus Limited



## System (13 January 2011)

Countplus Limited (CUP) is a leading professional services provider comprising 16 accounting firms, one financial planning firm and a financial advice dealer group.

http://www.countplus.com.au


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## danbradster (22 July 2011)

*Re: CUP - Countplus*

Ex-dividend on Monday, I topped up bigtime today.  Hopefully it's the right move.

Any opinions on this share?


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## skyQuake (22 July 2011)

*Re: CUP - Countplus*



danbradster said:


> Ex-dividend on Monday, I topped up bigtime today.  Hopefully it's the right move.
> 
> Any opinions on this share?




Why bother? stock is illiquid and divvie is less than 2%


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## danbradster (23 July 2011)

*Re: CUP - Countplus*



skyQuake said:


> Why bother? stock is illiquid and divvie is less than 2%




The dividend is quarterly.  $0.02 quarterly is $0.08 annually, from a $1.32 buy that is 6% fully franked.  Plus they have had some recent tie-ins that are meant to be earnings accretive, which makes >$0.02 dividends in the future a possibility.

Or you mean why would I buy now rather than later, all for a measly 1.5% dividend?  The franking makes it equivalent to 2.14%, I think.  Buying today for $1.32 is like buying for $1.292 next week.  Could I get it for $1.292 next week?  Maybe, maybe not.

Looks like a pretty interesting company to hold.  Hopefully it will be a consistent grower and consistent dividend payer, the average age of the businesses in the company is promising.


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## skyQuake (23 July 2011)

*Re: CUP - Countplus*



danbradster said:


> The dividend is quarterly.  $0.02 quarterly is $0.08 annually, from a $1.32 buy that is 6% fully franked.  Plus they have had some recent tie-ins that are meant to be earnings accretive, which makes >$0.02 dividends in the future a possibility.
> 
> Or you mean why would I buy now rather than later, all for a measly 1.5% dividend?  The franking makes it equivalent to 2.14%, I think.  Buying today for $1.32 is like buying for $1.292 next week.  Could I get it for $1.292 next week?  Maybe, maybe not.
> 
> Looks like a pretty interesting company to hold.  Hopefully it will be a consistent grower and consistent dividend payer, the average age of the businesses in the company is promising.




Yup, I have it as around 6.5% yield. However your 6.5% doesnt come with capital guarantee like a good bank deposit. 
If you're buying cause u like the co and did your homework, fair enough. However its a bit irresponsible to buy for the franked divvie given the low liquidity and swings in daily/weekly range.


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## danbradster (23 July 2011)

*Re: CUP - Countplus*



skyQuake said:


> Yup, I have it as around 6.5% yield. However your 6.5% doesnt come with capital guarantee like a good bank deposit.
> If you're buying cause u like the co and did your homework, fair enough. However its a bit irresponsible to buy for the franked divvie given the low liquidity and swings in daily/weekly range.




The franking adds 43% to the value of the dividend, it's a fair margin of safety.  Plus there's potential for the business to grow, especially since they don't have 100% dividend payout ratio, so they are therefore investing the non-distributed cash in the business.

They are showing almost $0.12 EPS for the December half year, dividends would be $0.04 for the half year (33% dividend payout ratio).  So the ~6.5% goes out as dividends (franked), plus another 13% back into the business.  Seems like potential for capital growth alongside the franked dividends.


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## ROE (17 April 2013)

*Re: CUP - Countplus*

Interesting the founder out lay nearly a cool 1 mil  to buy more stock on the market even with the recent run on the price - ....


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## chops_a_must (17 April 2013)

*Re: CUP - Countplus*

I've been in.

Great chart. Great yield.

Just not very liquid...


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## ROE (17 April 2013)

*Re: CUP - Countplus*



chops_a_must said:


> I've been in.
> 
> Great chart. Great yield.
> 
> Just not very liquid...




Yeah I been in it for a while crazy yield until  recent run up but still good yield ...went ex-div this week too -
There must be more upside for Barry to outlay a cool 1 mil to buy on market....at $1.89 a pop


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## prawn_86 (17 April 2013)

*Re: CUP - Countplus*



ROE said:


> Yeah I been in it for a while crazy yield until  recent run up but still good yield ...went ex-div this week too -
> There must be more upside for Barry to outlay a cool 1 mil to buy on market....at $1.89 a pop




wow just looked at these guys very quickly cause of your post.

6.5% at current prices and extremely consistent, quarterly payments. How did these go under the radar for so long?


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## VSntchr (17 April 2013)

*Re: CUP - Countplus*



prawn_86 said:


> wow just looked at these guys very quickly cause of your post.
> 
> 6.5% at current prices and extremely consistent, quarterly payments. How did these go under the radar for so long?




I had the same initial reaction.
But my concern with this company is the upcoming FOFA reforms.
I work for a big bank in wealth management and they are convinced that the reforms are going to squeeze the smaller players in this market.

Who knows whats going to happen, but this should be considered when determining the future earnings of related companies.


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## prawn_86 (17 April 2013)

*Re: CUP - Countplus*



VSntchr said:


> I had the same initial reaction.
> But my concern with this company is the upcoming FOFA reforms.
> I work for a big bank in wealth management and they are convinced that the reforms are going to squeeze the smaller players in this market.
> 
> Who knows whats going to happen, but this should be considered when determining the future earnings of related companies.




I'm only just starting out on my research, but with the brands and franchises they own i dunno if they would be classed as a smaller player. I dont know anything about the FOFA reforms either, but perhaps it would help them to secure other firms and bring them under their umbrella if it does get too much for small practices.

Cheers for your input


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## McLovin (17 April 2013)

*Re: CUP - Countplus*



VSntchr said:


> I had the same initial reaction.
> But my concern with this company is the upcoming FOFA reforms.
> I work for a big bank in wealth management and they are convinced that the reforms are going to squeeze the smaller players in this market.
> 
> Who knows whats going to happen, but this should be considered when determining the future earnings of related companies.




The overwhelming majority of these guys revenue comes from accounting and tax work, not financial planning. It's about 80/20.

It would be nice if these guys broke down how much of their growth is acquisition v organic. They often seem to mention they are not a growth by acquistion type firm and want to extract organic growth but they keep making acquisitions. It's hard to imagine 10% growth in the accounting industry is sustainable without being acquisitive. I looked at them a while ago and that was the main issue I had with them.


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## craft (17 April 2013)

*Re: CUP - Countplus*

CBA owns nearly half of CUP via buying Count.  They only moved on Count after Cup was spun off – their intentions would be worth considering.

1 Million is small change to Barry Lambert – he is way less invested in CUP than he was Count. I wouldn’t read too much into the ‘size’ of his purchase. 

FOFA reforms will probably cause consolidation – Unfortunately there a pretty long list of consolidators who have paid a high price for paying high acquisition prices to be the consolidator. Some success stories too, question is how will the story play out for CUP? - I don't know - I don't have a position.


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## Ves (17 April 2013)

*Re: CUP - Countplus*

It might be me being silly again.   But in the 2012 annual report there was Operating Cash Flow of around $13 mil.

Yet dividend payments were over $16 mil.

The annual report says that the payout ratio was 96% of cash profits.   How does this work?   I could never figure it out.  Also couldn't figure out the answer to McLovin's question re growth.  I passed at $1.30.  Same with WHG in the low $0.80s, similar yield.

FOFA should not have a massive impact, if any impact, on these guys.   It may even open up new opportunities to savvy accountants.


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## VSntchr (17 April 2013)

*Re: CUP - Countplus*



Ves said:


> FOFA should not have a massive impact, if any impact, on these guys.   It may even open up new opportunities to savvy accountants.




Yeah, to be honest I didnt look deep enough to see the impact, just saw financial planning and generalised.

Id say there is at least a decent amount of growth in accounting - especially if there is a shift away from financial planners.

The use of SMSFs are growing quicky...


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## ROE (17 April 2013)

*Re: CUP - Countplus*



craft said:


> CBA owns nearly half of CUP via buying Count.  They only moved on Count after Cup was spun off – their intentions would be worth considering.
> 
> 1 Million is small change to Barry Lambert – he is way less invested in CUP than he was Count. I wouldn’t read too much into the ‘size’ of his purchase.
> 
> FOFA reforms will probably cause consolidation – Unfortunately there a pretty long list of consolidators who have paid a high price for paying high acquisition prices to be the consolidator. Some success stories too, question is how will the story play out for CUP? - I don't know - I don't have a position.




Logically move by cba because banks only wants wrap platforms and fund management or advice for fund management which is mostly count ...countplus is more accounting and auditing.... 

Countplus has a bit of payroll processing for contractors as well...these are easy reliable revenue stream....all contractors need to go via a payroll companies so I assume countplus make deal with recruitment agency if there are contractors that want their payroll process, car leasing and salary sacrified send them our way....


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## prawn_86 (29 April 2013)

*Re: CUP - Countplus*

Ann out today saying they are considering some form of spin-off which acquires minority stakes. Seems very conceptual at this stage but it does mention that dividend growth may be slower because of the plans


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## Ves (29 April 2013)

*Re: CUP - Countplus*



prawn_86 said:


> Ann out today saying they are considering some form of spin-off which acquires minority stakes. Seems very conceptual at this stage but it does mention that dividend growth may be slower because of the plans



Is this really just a way of passing over the fact that they appear to be paying out more in dividends than underlying cash profit?


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## prawn_86 (1 May 2013)

*Re: CUP - Countplus*

Well the market seems to like it either way, currently testing new highs, albeit on low volumes


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## prawn_86 (28 August 2014)

*Re: CUP - Countplus*

Fallen off a cliff last few days since announced a 30% reduction in dividend


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## JTLP (28 August 2014)

*Re: CUP - Countplus*



prawn_86 said:


> Fallen off a cliff last few days since announced a 30% reduction in dividend




Was it a 30% reduction in their quarterly dividend going forward or a one off?

May be worth a look...


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## prawn_86 (29 August 2014)

*Re: CUP - Countplus*



JTLP said:


> Was it a 30% reduction in their quarterly dividend going forward or a one off?
> 
> May be worth a look...




Dividend reduced from an annual 12 cents to 8c for the foreseeable future so they can focus on additional growth and acquisitions


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## jbocker (19 August 2015)

*Re: CUP - Countplus*

Been a bit of a dip in the price last few days. If they keep holding their dividend payout, they will provide a good percentage return over the next 12 months.  
Annual report due out soon.


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## Cashflows (19 August 2015)

*Re: CUP - Countplus*

Wouldn't be too sure of the dividend yield, it seems that if you look at the last HY reports that CUP is still cash flow negative by about $4,052,000. This is in spite of a 74% lift in operational cash flows and it is being financed by debt. Which just got increased from $25m to $30m, supposedly to help the DEP, but that doesn't make much sense to me as I was under the impression that CUP was selling equity back to the principals in order to incentivise them. This would release equity back into the business which could be re-invested into the new model. Lastly, in the last line of the last paragraph of the announcement highlighting the new line of credit it says, 'A possible Dividend Re-investment Plan, which would be considered in the above funding mix (debt, retained earnings, sale of businesses in IPO) in due course....'

On the face of it, the financials and even the new business model seem quite attractive, but this negative cash flow (dividends being funded out of increasing debt) is a red flag to me. If anyone can explain or argue against it I would love to hear it!


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## skc (19 August 2015)

*Re: CUP - Countplus*



Cashflows said:


> Wouldn't be too sure of the dividend yield, it seems that if you look at the last HY reports that CUP is still cash flow negative by about $4,052,000. This is in spite of a 74% lift in operational cash flows and it is being financed by debt. Which just got increased from $25m to $30m, supposedly to help the DEP, but that doesn't make much sense to me as I was under the impression that CUP was selling equity back to the principals in order to incentivise them. This would release equity back into the business which could be re-invested into the new model. Lastly, in the last line of the last paragraph of the announcement highlighting the new line of credit it says, 'A possible Dividend Re-investment Plan, which would be considered in the above funding mix (debt, retained earnings, sale of businesses in IPO) in due course....'




As a general rule of thumb when dividend yield is >8% fully franked, the market has either got it wrong, or is suspect of the future dividend stability. MND, NWH etc are other prime examples. When CUP was paying 3c per quarter dividend, it was trading around $1.75 or a yield of ~7%. When the dividend was cut to 2c per quarter around August last year, the share price promptly fell by the same amount to maintain much of that yield percentage. 

Looking at the 2014 annual report, the company has shown very little growth in revenue or income for the past 3 years. So it's little wonder that no one really believed that CUP was going to generate growth with higher retained earnings.



Cashflows said:


> On the face of it, the financials and even the new business model seem quite attractive, but this negative cash flow (dividends being funded out of increasing debt) is a red flag to me. If anyone can explain or argue against it I would love to hear it!




The alternate explanation is that, using the Dec 2014 half year as example, dividend ($5.654m) is paid out of operating cashflow ($9.054m). While retained earning (~$3.4m) and additional debt ($3.54m) were used to satisfy the $7.539m investing cashflow. 

Provided the investing cashflow from the debt is generating future economic benefits, it is not necessarily a unsustainable situation.


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## jbocker (20 August 2015)

*Re: CUP - Countplus*

The company has released an unprompted explanation to the ASX.
It mentions their dividend expectations...
_The dividend of 2 cent fully franked paid quarterly, in the absence of unforeseen events, is expected to be continued in 2015/16. The November 2015 quarterly dividend is expected to be declared next week._

The price has recovered somewhat.


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## Cashflows (20 August 2015)

*Re: CUP - Countplus*



skc said:


> The alternate explanation is that, using the Dec 2014 half year as example, dividend ($5.654m) is paid out of operating cashflow ($9.054m). While retained earning (~$3.4m) and additional debt ($3.54m) were used to satisfy the $7.539m investing cashflow.
> 
> Provided the investing cashflow from the debt is generating future economic benefits, it is not necessarily a unsustainable situation.




Thanks Skc for the reply, I guess what I find concerning is that a large portion of that $7.539m seems to be investing into past acquisitions, and I do wonder how much of that will produce higher returns in the future, though on the other hand it could be a part of their DEP. Just not sure about the business as a whole I guess, finding it hard to 'see' where it will be in a few years time...


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## Cashflows (13 February 2016)

*Re: CUP - Countplus*



Cashflows said:


> Just not sure about the business as a whole I guess, finding it hard to 'see' where it will be in a few years time...




Down I guess...





So we went from this, 'On a continuing business basis, ie excluding any abnormals, our full year 2016 profit before tax budgets are in line with FY2015. However, it is too early to be more specific as to likely outcomes in 8 months’ time' Phil Aris 

To this.... 'Based on our expected unaudited half year results, we anticipate our latest full year 2016 reforecast operating results excluding abnormals to be around 20% below last year.'... 

Two and a half months later. Who knew accounting could be so volatile? 

So a 20% decline of NPBT of $13,051,000 (I wonder whether they include the increase in valuation of the property of $1,680,000 as an 'abnormal' or not - maybe it depends on which report) means $10,440,000 before tax which means a net profit before revaluation of class shares of $7,308,000. Cash flow wise I'm not sure much as changed except a possible increase in costs due to the new business models, countered by increase in cash from DEP. However, it seems a bit unlikely that they can maintain a dividend of $10,071,000 while reporting a profit before revaluation of assets of $7,308,000....

I know it is too early to tell whether the new strategies will work, and while the impairments will not necessarily be against cash flows, it is still a down grade, and I'm cynical of my ability to analyse the books better than the accounting firm putting them together haha.


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## WRiley (25 September 2016)

Keen on CUP too. Looking closely at the Financial Highlight for FY2015/16, and extracting just one important point in that table on Pg 2,

Basic EPS : 12.13 cpu
Diluted EPS : 12.13 cpu

With the above EPS, it is surely able to cover the full year divvie payout of 8 cpu.


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## WRiley (25 September 2016)

WRiley said:


> Keen on CUP too. Looking closely at the Financial Highlight for FY2015/16, and extracting just one important point in that table on Pg 2,
> 
> Basic EPS : 12.13 cpu
> Diluted EPS : 12.13 cpu
> ...




Looked back deeper into the financial side, looked at the 2016 ANNUAL REPORT released a few days ago, Page 9, Financial Summary. Should we remove the effect from the Non-cash fair adjustments amounting to $16,294,000 under the column '2016', and we 'process' all the way down that column till the 'Basic earnings per share (Cents)' line, we will still end-up with close to 9.01 cpu, which was the reading back in FY2015.


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## WRiley (10 November 2016)

Dropped to 78 Cts today after reports appeared concerning the AGM today and a presentation at the AGM this morning. What happened ? I don't see anything unusual in the reports which we have not been told before !


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## So_Cynical (12 May 2017)

Lucky i sold out of CUP a couple of weeks ago, just dumb luck as i had to sell something and just settled on CUP, Bought back in Feb at 0.65 and sold at 0.685 just as the SP fell over, looking cheap again after the dividend cut, the market pricing something that may or may not be permanent as beyond doubt.

That roll over pattern is a common sight...often followed by a little dip down to a new low then rebound.
~


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## WRiley (15 May 2017)

I'm waiting to see that rebound that you mentioned,... TA-wise, how high does it normally rebound to ?


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## So_Cynical (16 May 2017)

WRiley said:


> I'm waiting to see that rebound that you mentioned,... TA-wise, how high does it normally rebound to ?




TA-wise i have no idea, i imagine that 69 or 70c would be good going, perhaps an accumulation opportunity to buy the low 60's and then take part profits in the high 60's rinse and repeat to build a position....actually that sounds like a bit of a plan.


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## WRiley (17 May 2017)

The mkt dropped by almost a big 1% today, BUT CUP held on to its price range of 0.62 to 0.64. The mkt is of the opinion that CUP deserves this price under all mkt conditions. For this counter, there is just NO NEWS at all,... hence no catalyst at all, be it good or bad. Are we going to be kept in suspense until the FY Reporting in early-August ?


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## PZ99 (17 May 2017)

Last time I saw CUP do well was because they'd invested in CL1 shares which masked the lackluster performance of the rest of the company's profits. I noticed the outgoing Chairman is getting involved with medical cannabahash. Maybe CUP  should get into that as well? LOL

I divested for 90c some time ago and view it as a high risk investment in its current form.


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## Ann (14 June 2019)

*CountPlus strikes deal to acquire accounting business Count Financial from Commonwealth Bank*

_Financial services firm CountPlus (ASX: CUP) has announced it will acquire 100% of Count Financial Limited from the Commonwealth Bank of Australia (ASX: CBA) in a $2.5 million deal which will house the entire Count network under the one roof.


The acquisition will be administered by CountPlus (which will hold 85% of Count Financial) and a special subsidiary of a discretionary trust established for the benefit of Count member firms known as CMFT (which will hold the remaining 15%).


When completed, the deal will bring the entire Count network together in one home to focus on the delivery of an accountant-led financial advice business model.


Today’s news follows CountPlus’ $2.48 million acquisition in April of a 40% interest in Melbourne-based Rundles Prime Pty Ltd and a 20% interest in Rundles Financial Planning Pty Ltd. More..._


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## Ann (15 June 2019)

This had a big jump on the news over the last couple of days, let's see how it goes, it appears to have a bit of selling pressure up to about .80c looking at the Equivolume chart.


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## RobL (4 October 2019)

It might be worthwhile keeping an eye on this stock as the price breached short term resistance going north at AUD 1.004 closing today (Friday, October 4) at AUD 1.050 with above average volume. The next resistance level is AUD 1.095 and then  AUD 1.140. The stock hit an all-time high of AUD 2.000 in October 2013 with an all-time low of AUD 0.440 in June 2019.

Disclaimer:
This information is for general information only and should not be used solely to base trading or investment decisions. Please do your own research. The companies website is here  https://www.countplus.com.au .

Here https://decentralisedwealth.com/TopTens.html you can find some other interesting US stock’s to look at. Australian stocks will be added in the next week or so.


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## galumay (5 October 2019)

I did run my FA ruler over it at one stage, there is some potential coming out of the Banking RC and its not a bad business. I never developed enough conviction to take a position though.


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