TFSA remediation weighs down CountPlus
Accountancy based financial services group CountPlus has reported a net profit after tax of just $875,000 and loss of $106,000 attributable to owners for the year ended 30 June, hampered by the costs of regulatory issues impacting financial planning group, Total Financial Solutions Australia (TFSA).
The company reported a consolidated net profit before tax of $2,163,000 but this was eroded by the provisioning made for the (TFSA) issues which had additional licence conditions imposed upon it in 2015 and consequent remediation processes.
The company’s announcement said there was no dividend payable for 30 June 2017 based on the need for ongoing operational improvements and that dividends would resume based on the half year 31 December 2017 results, if approved by the Board.
Not even the highly profitable sale of the Countplus holding in Class Super was sufficient to offset the situation, albeit that the company told the Australian Securities Exchange (ASX) that core underlying operating profit (after excluding the effect of the investment in Class Limited and non-cash impairments) was $8,625,000 which represented an improvement on the prior year.
It said the directors had noted that the core operating profit had been achieved at a time of significant change in the company as “we define, align, build and grow our core business”.
The magnitude of the situation was such that the company has written to shareholders explaining the situation along with both management and strategy changes with respect to TFSA.
The results announcement said TFSA “has a new Board and management team which will ensure TFSA’s corporate governance will strengthen the business and client offerings of each of the professional firms it serves in the network”.
“We have made significant changes to the TFSA operating model to reflect our desire to build a high-quality licensee offering a sustainable business,” it said. “These changes will have a short-term impact on TFSA as we transition to a new business model. The CountPlus Board therefore believe it is prudent to write down the carrying value of TFSA by $2,700,000.
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