This transaction gives investors a small insight into the hollow logs contained within this consolidation financial services business.
Realising a $1.25m profit on sale after 100% write of of the carrying value of the residual business demonstrates the unrecognised value in most accounting businesses.
The financial accounts adopt International Accounting Standards and demand the write off goodwill annually, even though the individual businesses generate higher fees and build goodwill each year.
There is a case to be made for both retaining goodwill and writing it off. Certainly it is not my call, but as an investor, l suspect the underlying realisable value of group goodwill is considerably higher than the casting value in the accounts.
l believe the exit from audit/assurance services is a positive move in an increasingly challenged and litigious sector of the profession.
Thinking 5 years ahead, consolidation of financial services resulting from the exit of many older practitioners offers CUP a smorgasbord of profitable opportunities.
GLTASH
CUP Price at posting:
$1.01 Sentiment: Buy Disclosure: Held
A personalised tool to help users track selected stocks. Delivering real-time notifications on price updates, announcements, and performance stats on each to help make informed investment decisions.
(20min delay)