The solid but unspectacular 2020 result from Countplus gives a...

The solid but unspectacular 2020 result from Countplus gives a glimpse of both the durability of the business, as well as the meaningful challenges that still lie ahead.

l prefer to pass high level comments rather than detailed assessment of the result as 2020 has been so impacted by Count Financial and COVID-19 that it is naive to rely on the financial report as a reflection of future earnings capacity.

The accounting business was strong and is well positioned over the next 5 years for growth by acquisition. That thesis remains intact.

The financial planning business has tremendous upside as reflected in the contribution to profits in the 2nd half, eclipsing the accounting business.

Dealing with the residual 47% of grandfathered commissions that will cease on 31.12.20 will be a challenge and will dilute profits in 2021. Right sizing the FP side over the next 2 years could be extremely painful but also extremely profitable.

Cash on hand and NTA are very healthy. The modest increase in YOY dividend probably disappointed the market but reflects the conservative stance of the board to the unknowable conditions facing the world and the industry over the shorter term.

Looking forward, l expect dividend disappointment may lead to satisfaction for those patient enough to stay the course.

Considering the outstanding turnaround of the business over the last 3 years, l remain firmly convinced CUP remains a profitable and growing business and congratulate management and staff on their recent achievements.

Few businesses survive over time without strong objective and sound foundations. I believe we have them here.

GLTASH