omg, page-4

DKN ROE is poor. But:

- DKN bought Lonsdale and Wrap Account Limited in 2007 at the height of the market. They paid way too much but at least got a great asset.

- DKN's platform revenue is FOFA compliant from a proposed conflicted remuneration point of view. Count's is not. Many Count advisers rely on platform rebates which could well disappear under FOFA. DKN pays very small rebates which hardly matter to their advisers.

- DKN charges a lot less for their platform. Count charges a lot more and will hence struggle to get new inflows in this increasingly fee conscious world.

- DKN has never had a quarter of negative net flows into their platform. Quite an achievement.

- DKN keeps attracting quality new practices to the Lonsdale brand. Thereby increasing FUA.

- DKN keep nudging the $8b FUA mark but everytime they get to this level the markets knock them back. This is an absolutely crucial level for DKN as it is the point where each additional dollar of revenue from FUA gets increased impact to the bottom line due to most costs being fixed. Effectively there is plenty of growth in the business just waiting to be realised.

- The company has no net debt.

- Pays a good dividend. No franking credits at the moment due to writing off the costs of the Lonsdale purchase.

- This is a great cash business. No capital costs and very little increase in fix costs required as the business grows.

- The last result looks disappointing on the surface and the stock got hammered. But I believe the drop in reported profit was primarily due to a change in accounting treatment. The cash profit was still great.

- Has offten been mentioned as a takeover target. But probably not due to the low level of share free float.

Don't get me wrong, Count has done very well over a long period of time. I just think DKN is better placed going forward.

DKN won't appear on value investors' radars for quite a while due to poor past performance and low ROE but in time it will (if i'm right).