Results … Count – Seek

By Glenn Dyer | More Articles by Glenn Dyer

Count Financial probably escaped a beating yesterday at the hands of investors when it missed its confident forecast of a 25 per cent lift in 2007 earnings.

Normally investors would take a stick to the share price but Count shares finished unchanged on $2.80 after hitting a low of $2.70 and a high of $2.90.

And that was probably a fair result, after all Count said first half net earnings rose 27 per cent and the forecast rise in full year profits was scaled back a whole four percentage points to 21 per cent, which is hardly a crime.

“At this time we would expect earnings before interest and tax of at least $28 million,” which would be up 21 per cent on the prior year, Count said in a statement to the ASX yesterday.

Net profit would also rise by around 21 per cent to round $21 million, the company told investors.

It is very hard to take exception to that strong performance. But should the company’s second half undershoot by more than expected then it can expect harsher treatment later in the year.

Still investors must have appreciated the 27 per cent rise in net earnings to $9.48 million for the December half, after revenue rose 20.6 per cent to $58.64 million.

At the annual meeting last Melbourne Cup Day Count’s incoming chairman, Barry Lambert told shareholders: “At this time, management is confident of achieving a good result in 1H07, but is unable to predict that it will achieve target EPS growth of 25 per cent.

“We will be in a better position to give guidance at the release of our first half results in February 2007 because we will know when our new ventures will start contributing to our profits. On a month-by-month basis they should be profitable by financial year-end.”

But he did give a strong hint that there would be cost pressures, saying:

“However, expenses will be somewhat higher in 2007 compared to 2006 due to: Salary reviews taking effect from 1 September 2006;

· Countplus commencing activity in July 2006; and the establishment of a loans referral model (refer ASX Announcement 25 September 2006). This team consists of seven people.

“These growth initiatives will result in lower profit growth in 2007, however if successful, and we expect they will be, will result in our strong track record continuing for many years to come.”

Count declared an interim dividend of one cent, in line with the previous corresponding half and it also announced an “Easter” interim dividend of two cents to be paid on April 13.

“We foreshadow total dividends of no less than eight cents for the year – up 33 per cent,” Count said.

Count also said it would begin an on-market share buyback next month of up to five million shares.

No wonder the shares were steady, there was enough there in the detail to keep investors in COU happy for the time being.


Meanwhile it was a very different story for online jobs group, Seek.

The company, 25 per cent owned by PBL, hit another all time high yesterday of $6.91: a rise of 59c, or around 9 per cent on the day.

At this level Seek will have a market cap well in excess of $1.85 billion.

The market performance and the results again emphasise the extent of the error former Fairfax CEO, Fred Hilmer made when he failed to aggressively chase Seek when an opportunity emerged several years ago, to take a stake.

Seek says it’s anticipating “strong revenue and profit growth in the second half”, after lifting first half net profit 63 per cent to $23.86 million.

It was struck on a 48 per cent rise in revenues in the half to $70 million (excluding interest) from $47.8 million.

Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 63 per cent to $34.6 million after the company boosted EBITDA margins to 49.5c in the dollar from 44.9c a year ago.

That was pretty good going because the trend in many newish companies with rapid growth (in tech, Telco and internet areas) is to start with high margins which then contract as growth slows and costs and competition rise.

Seek said an interim dividend of six cents per share, fully franked would be paid (3.7c, fully franked, in 2006 first half).

Joint CEO, Paul Bassat, said Seek had achieved solid growth across all areas of its business as volumes of ads and the number of job seekers visiting the Seek site in both Australia and New Zealand increased significantly.

Mr Bassat said the company had expanded its product range with the introduction of Premium Listings and the Seek Commercial portal dedicated to businesses and franchises for sale.

“We have targeted SMEs (small to medium-sized enterprises) and the early-stage markets of government, healthcare and education where the ad volumes have grown substantially,” he said.

Seek acquired a 50 per cent stake in IDP Education Australia and a 25 per cent stake in Chinese online employment business Zhaopin Ltd.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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