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Easton Investments Limited (EAS) was formerly known as Equities and Freeholds Limited (EQF).
http://www.equitiesandfreeholds.com.au
http://www.equitiesandfreeholds.com.au
DVR - Diverger Limited
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On November 24th, 2021, Easton Investments Limited (EAS) changed its name and ASX code to Diverger Limited (DVR).
Dona Ferentes
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Our Company and its businesses have performed strongly after another challenging COVID affected year, reflecting the outstanding efforts, dedication and resilience of our people, and also due in part to the recurring nature of a significant portion of the Company’s income which is derived from professional support services and products delivered on-line to accountants and financial planners (advisers).
Recapping briefly on the major achievements of the last 12 months, we have:
Underlying Profit increased by 20% to $6.81m, an excellent result considering the adverse impact of COVID19 on face-to-face training, the loss of earnings from divested operations and the on-going investment in operational capability and efficiency.
Whilst some of our businesses have been negatively impacted by COVID-19, the very nature of our businesses and the important role that they play, combined with our business diversity and dedicated staff, has held our Company in good stead. Our narrower focus on core businesses with an on-line service capability has allowed us to continue to meet the increased demands placed on our businesses, our people, our members and our advisers.
Cash flow generated from operations of $7.53m was a strong result, being broadly in line with Underlying Profit and contributed to the extinguishment of borrowings during the financial year.
A final dividend of 2.5 cents per share fully franked has been declared, bringing the full year dividend payment to 9.0 cents per share fully franked, including a special dividend of 5.0 cents per share fully franked paid in January 2021.
Recapping briefly on the major achievements of the last 12 months, we have:
- Simplified the Company by reducing our number of business interests;
- Strengthened our balance sheet and financial position (with a net cash position of $3.6m at 31 October 2021);
- Recommended an off-market proportional takeover offer from HUB24 Limited, which resulted in HUB24 becoming a substantial shareholder in Easton with a 31.5% interest;
- Entered into an important strategic relationship with HUB24, encompassing a technology and distribution agreement, which provides future access to innovative technology and data solutions, specifically focused on repositioning Easton with a competitive advantage in the delivery of efficient, cost-effective solutions and services to advisers, accountants and their clients;
- Acquired Paragem Limited, a licensee entity previously owned and operated by HUB24;
- Appointed a new managing director, Mr Nathan Jacobsen, with effect from 1 February 2021;
- Strengthened our Board with the appointment of a new non-executive director, Mr Anthony McDonald; and
- Reset the Company’s strategic plan with a more concentrated focus on achieving a step change in scale and capability to become a market leader in the delivery of services to accountants and advisers where our Company has a highly competitive position, defined strengths and widely recognised expertise.
Underlying Profit increased by 20% to $6.81m, an excellent result considering the adverse impact of COVID19 on face-to-face training, the loss of earnings from divested operations and the on-going investment in operational capability and efficiency.
Whilst some of our businesses have been negatively impacted by COVID-19, the very nature of our businesses and the important role that they play, combined with our business diversity and dedicated staff, has held our Company in good stead. Our narrower focus on core businesses with an on-line service capability has allowed us to continue to meet the increased demands placed on our businesses, our people, our members and our advisers.
Cash flow generated from operations of $7.53m was a strong result, being broadly in line with Underlying Profit and contributed to the extinguishment of borrowings during the financial year.
A final dividend of 2.5 cents per share fully franked has been declared, bringing the full year dividend payment to 9.0 cents per share fully franked, including a special dividend of 5.0 cents per share fully franked paid in January 2021.
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Count to acquire Diverger 22 September 2023 Count Limited (ASX: CUP) (Count or the Company) today announces it has entered into a binding Scheme Implementation Deed with Diverger Limited (ASX: DVR) (Diverger) under which Count will acquire 100% of the issued shares in Diverger by way of a board-recommended scheme of arrangement (Scheme or Transaction). At completion, Count will represent a leading diversified financial services provider with total revenues of $132 million, Funds Under Management and Advice (FUMA) of $29 billion, around 550 advisers, 563 accountants and a significantly expanded Services segment.
The Transaction is unanimously recommended by the Board of Directors of Diverger, in the absence of a superior proposal and subject to the independent expert concluding (and continuing to conclude) that the Scheme is in the best interests of Diverger shareholders. Diverger’s major shareholder, HUB24 which currently holds approximately 31.5% of Diverger’s ordinary shares, has issued a statement of support for the Transaction, and, in the absence of a superior proposal, intends to vote all of the Diverger shares it holds or controls in favour of the Scheme.
Count Chief Executive Officer Hugh Humphrey said "The transformational acquisition of Diverger continues the disciplined execution of Count’s strategic plan and accelerates the realisation of our growth ambitions.
This transaction follows the successful acquisition of Affinia and signals an exciting new phase for the Company. Diverger has a strong cultural fit with our Company and the combination is expected to unlock material benefits for all stakeholders as well as positioning us to lead further consolidation.”
CUP ASX ANNOUNCEMENT 2 | ASX Announcement – CUP Under the Scheme, Diverger shareholders will receive consideration comprising 1.38 Count ordinary shares plus $0.367 in cash per Diverger ordinary share (the Standard Consideration). This implies a value of $1.14 per Diverger ordinary share based on the last closing share price of Count as at 21 September 2023 of $0.56.
As an alternative, Diverger shareholders will have the option to elect to receive more shares or $1.10 per share in cash for their consideration mix, subject to scale-back, as set out below. The Scheme values Diverger at $45.3 million. Highlights of the transaction
▪ Transformational acquisition between two highly complementary businesses, creating a leading integrated financial services provider
▪ Transaction is expected to deliver a material increase in scale and diversification of Count’s revenue and earnings as well as unlock incremental growth opportunities
▪ Transaction is expected to deliver compelling shareholder value. Transaction will be EPS accretive after completion and 25%+ EPS accretive after realisation of the expected full annual run-rate cost synergies
▪ Diverger’s Board has unanimously recommended that Diverger shareholders vote in favour of the Scheme, in the absence of a superior proposal and subject to the Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interests of Diverger shareholders
▪ Diverger’s major shareholder, HUB24, has issued a statement of support for the Transaction, and, in the absence of a superior proposal intends to vote all of the Diverger shares it holds or controls in favour of the Scheme
▪ Diverger shareholders will receive, as Standard Consideration, 1.38 Count ordinary shares plus $0.367 in cash for each Diverger ordinary share
▪ This offer implies total consideration of $1.14 for each Diverger ordinary share based on the last closing share price of Count as at 21 September 2023 of $0.56, representing a 31.0% premium to Diverger’s 3 month VWAP of $0.87
▪ Transaction is expected to be implemented in 1H CY24 3 | ASX Announcement – CUP Strategic rationale Diverger is a highly complementary business to Count, with a collection of wealth and accounting brands representing around 200 advisers and $12 billion in FUMA. Diverger generated net revenues of $37.6 million and Net Profit After Tax and Amortisation (NPATA) of $4.7 million for the financial year ending 30 June 2023. The combination of these highly complementary businesses will create a leading financial services provider with substantial increases in scale across Count’s existing Wealth, Accounting and Services divisions.
The new Count Group will represent total pro forma FY23 revenues of $132 million, FUMA of $29 billion with approximately 550 advisers, 563 accountants and a significantly expanded Services segment. Count has identified approximately $3 million in cost synergies, and a number of new revenue growth opportunities to be delivered through a rigorous integration and benefit realisation program. Upon completion, Count will benefit from a broader and more diversified shareholder base.
The transaction is expected to unlock significant value for shareholders and the combined entity will be better positioned to lead further industry consolidation and inorganic growth opportunities.
The transaction is expected to be EPS accretive after completion and 25%+ EPS accretive after realisation of the expected full run-rate cost synergies (excluding revenue synergies and one-off transaction and integration costs). Count’s Offer for Diverger Shares The Transaction will be affected via a scheme of arrangement with every Diverger ordinary share being acquired for, as Standard Consideration, 1.38 newly issued shares in Count and $0.367 in cash per Diverger share.
Based on the last closing share price of Count as at 21 September 2023 of $0.56, this implies consideration of $1.14 for each Diverger share. 4 | ASX Announcement – CUP As an alternative to the Standard Consideration, Diverger shareholders will be offered the choice of receiving alternative consideration of either $1.10 per Diverger share in cash or 2.07 Count ordinary shares per Diverger share, with the availability of this alternative consideration subject to a scale-back mechanism that will cap the total amount of cash consideration to be paid to Diverger shareholders at $14.6 million and the number of new Count ordinary shares issued at 54.9 million.
Based on the undisturbed Diverger share price this proposal represents a 27.0% premium to Diverger’s one month VWAPof$0.90 and a 31.0% premium to Diverger’s three month VWAP of $0.87 as at 21 September 2023. Count and Diverger shareholders are expected to own approximately 67% and 33% respectively of the combined group on closing, based on the current number of Count shares outstanding. Financial Benefits
▪ Pre-tax synergies of approximately $3 million targeted in the first full financial year post completion with one-off transaction and integration costs of approximately $8 million
▪ Transaction expected to be EPS accretive after completion and deliver 25%+ EPS accretion to Count shareholders after realisation of the expected full run-rate cost synergies
▪ Offer price implies an EV/EBITA acquisition multiple of 6.6x pre-synergies, 4.6x postsynergies, based on full financial year 2023 results for Diverger. Governance and Management Following completion of the Transaction, members of the Executive Leadership Team will continue to report to CEO Hugh Humphrey.
The Board of Count will remain unchanged.
Key roles in Diverger will transition across to Count, and talented individuals will be secured into new roles or engaged for transitional periods.
5 | ASX Announcement – CUP Funding The cash component of the offer totaling $14.6 million, will be funded by a new debt facility.
The new debt facility will also refinance Diverger’s existing debt facility and includes undrawn headroom for liquidity management purposes. The pro forma leverage of the group is expected to be ~1.7x gross debt/ pro forma EBITDA shortly after implementation. Conditions and Implementation Process The Scheme is subject to customary conditions and approvals including Court, regulatory and Diverger shareholder approval.
The obligations of Count and Diverger regarding the implementation of the Transaction are agreed and set out in the Scheme Implementation Agreement entered into by both parties. The Scheme Implementation Agreement contains customary exclusivity provisions, including noshop and no-talk restrictions and a notification obligation, as well as a matching right in favour of Count.
It also details circumstances under which Diverger may be required to pay Count a break-fee of $500,000 and vice versa. A copy of the Scheme Implementation Agreement is attached to this announcement.
Timetable The acquisition is currently expected to close in 1H CY24 following satisfaction of conditions, including Diverger shareholder and other approvals. Advisers UBS is acting as financial adviser and Baker McKenzie as legal adviser to Count.
Investor and Analyst Briefing Count will be holding a briefing for investors and analysts on Monday, 25 September 2023 at 9:30am Australian Eastern Standard Time.
Participants can register for the briefing at the following link: Count Limited - Investor and Analyst Briefing (25 September 2023)
i hold CUP , but MIGHT consider buying into DVR as a side-door into extra CUP OR buy extra CU if a significant dip
please take care CUP has been swallowing up businesses at a surprising rate
The Transaction is unanimously recommended by the Board of Directors of Diverger, in the absence of a superior proposal and subject to the independent expert concluding (and continuing to conclude) that the Scheme is in the best interests of Diverger shareholders. Diverger’s major shareholder, HUB24 which currently holds approximately 31.5% of Diverger’s ordinary shares, has issued a statement of support for the Transaction, and, in the absence of a superior proposal, intends to vote all of the Diverger shares it holds or controls in favour of the Scheme.
Count Chief Executive Officer Hugh Humphrey said "The transformational acquisition of Diverger continues the disciplined execution of Count’s strategic plan and accelerates the realisation of our growth ambitions.
This transaction follows the successful acquisition of Affinia and signals an exciting new phase for the Company. Diverger has a strong cultural fit with our Company and the combination is expected to unlock material benefits for all stakeholders as well as positioning us to lead further consolidation.”
CUP ASX ANNOUNCEMENT 2 | ASX Announcement – CUP Under the Scheme, Diverger shareholders will receive consideration comprising 1.38 Count ordinary shares plus $0.367 in cash per Diverger ordinary share (the Standard Consideration). This implies a value of $1.14 per Diverger ordinary share based on the last closing share price of Count as at 21 September 2023 of $0.56.
As an alternative, Diverger shareholders will have the option to elect to receive more shares or $1.10 per share in cash for their consideration mix, subject to scale-back, as set out below. The Scheme values Diverger at $45.3 million. Highlights of the transaction
▪ Transformational acquisition between two highly complementary businesses, creating a leading integrated financial services provider
▪ Transaction is expected to deliver a material increase in scale and diversification of Count’s revenue and earnings as well as unlock incremental growth opportunities
▪ Transaction is expected to deliver compelling shareholder value. Transaction will be EPS accretive after completion and 25%+ EPS accretive after realisation of the expected full annual run-rate cost synergies
▪ Diverger’s Board has unanimously recommended that Diverger shareholders vote in favour of the Scheme, in the absence of a superior proposal and subject to the Independent Expert concluding (and continuing to conclude) that the Scheme is in the best interests of Diverger shareholders
▪ Diverger’s major shareholder, HUB24, has issued a statement of support for the Transaction, and, in the absence of a superior proposal intends to vote all of the Diverger shares it holds or controls in favour of the Scheme
▪ Diverger shareholders will receive, as Standard Consideration, 1.38 Count ordinary shares plus $0.367 in cash for each Diverger ordinary share
▪ This offer implies total consideration of $1.14 for each Diverger ordinary share based on the last closing share price of Count as at 21 September 2023 of $0.56, representing a 31.0% premium to Diverger’s 3 month VWAP of $0.87
▪ Transaction is expected to be implemented in 1H CY24 3 | ASX Announcement – CUP Strategic rationale Diverger is a highly complementary business to Count, with a collection of wealth and accounting brands representing around 200 advisers and $12 billion in FUMA. Diverger generated net revenues of $37.6 million and Net Profit After Tax and Amortisation (NPATA) of $4.7 million for the financial year ending 30 June 2023. The combination of these highly complementary businesses will create a leading financial services provider with substantial increases in scale across Count’s existing Wealth, Accounting and Services divisions.
The new Count Group will represent total pro forma FY23 revenues of $132 million, FUMA of $29 billion with approximately 550 advisers, 563 accountants and a significantly expanded Services segment. Count has identified approximately $3 million in cost synergies, and a number of new revenue growth opportunities to be delivered through a rigorous integration and benefit realisation program. Upon completion, Count will benefit from a broader and more diversified shareholder base.
The transaction is expected to unlock significant value for shareholders and the combined entity will be better positioned to lead further industry consolidation and inorganic growth opportunities.
The transaction is expected to be EPS accretive after completion and 25%+ EPS accretive after realisation of the expected full run-rate cost synergies (excluding revenue synergies and one-off transaction and integration costs). Count’s Offer for Diverger Shares The Transaction will be affected via a scheme of arrangement with every Diverger ordinary share being acquired for, as Standard Consideration, 1.38 newly issued shares in Count and $0.367 in cash per Diverger share.
Based on the last closing share price of Count as at 21 September 2023 of $0.56, this implies consideration of $1.14 for each Diverger share. 4 | ASX Announcement – CUP As an alternative to the Standard Consideration, Diverger shareholders will be offered the choice of receiving alternative consideration of either $1.10 per Diverger share in cash or 2.07 Count ordinary shares per Diverger share, with the availability of this alternative consideration subject to a scale-back mechanism that will cap the total amount of cash consideration to be paid to Diverger shareholders at $14.6 million and the number of new Count ordinary shares issued at 54.9 million.
Based on the undisturbed Diverger share price this proposal represents a 27.0% premium to Diverger’s one month VWAPof$0.90 and a 31.0% premium to Diverger’s three month VWAP of $0.87 as at 21 September 2023. Count and Diverger shareholders are expected to own approximately 67% and 33% respectively of the combined group on closing, based on the current number of Count shares outstanding. Financial Benefits
▪ Pre-tax synergies of approximately $3 million targeted in the first full financial year post completion with one-off transaction and integration costs of approximately $8 million
▪ Transaction expected to be EPS accretive after completion and deliver 25%+ EPS accretion to Count shareholders after realisation of the expected full run-rate cost synergies
▪ Offer price implies an EV/EBITA acquisition multiple of 6.6x pre-synergies, 4.6x postsynergies, based on full financial year 2023 results for Diverger. Governance and Management Following completion of the Transaction, members of the Executive Leadership Team will continue to report to CEO Hugh Humphrey.
The Board of Count will remain unchanged.
Key roles in Diverger will transition across to Count, and talented individuals will be secured into new roles or engaged for transitional periods.
5 | ASX Announcement – CUP Funding The cash component of the offer totaling $14.6 million, will be funded by a new debt facility.
The new debt facility will also refinance Diverger’s existing debt facility and includes undrawn headroom for liquidity management purposes. The pro forma leverage of the group is expected to be ~1.7x gross debt/ pro forma EBITDA shortly after implementation. Conditions and Implementation Process The Scheme is subject to customary conditions and approvals including Court, regulatory and Diverger shareholder approval.
The obligations of Count and Diverger regarding the implementation of the Transaction are agreed and set out in the Scheme Implementation Agreement entered into by both parties. The Scheme Implementation Agreement contains customary exclusivity provisions, including noshop and no-talk restrictions and a notification obligation, as well as a matching right in favour of Count.
It also details circumstances under which Diverger may be required to pay Count a break-fee of $500,000 and vice versa. A copy of the Scheme Implementation Agreement is attached to this announcement.
Timetable The acquisition is currently expected to close in 1H CY24 following satisfaction of conditions, including Diverger shareholder and other approvals. Advisers UBS is acting as financial adviser and Baker McKenzie as legal adviser to Count.
Investor and Analyst Briefing Count will be holding a briefing for investors and analysts on Monday, 25 September 2023 at 9:30am Australian Eastern Standard Time.
Participants can register for the briefing at the following link: Count Limited - Investor and Analyst Briefing (25 September 2023)
i hold CUP , but MIGHT consider buying into DVR as a side-door into extra CUP OR buy extra CU if a significant dip
please take care CUP has been swallowing up businesses at a surprising rate
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On March 4th, 2024, Diverger Limited (DVR) was removed from the ASX's Official List in accordance with Listing Rule 17.11, following implementation of the scheme of arrangement between DVR and its shareholders in connection with the acquisition of all the issued capital in DVR by Count Limited (CUP).
