Collection House Limited (ASX: CLH), a financial services company from the Diversified Financial Industry Group, which provides the organizations and individuals with world-class solutions in credit management, collections and customer care, announced that it has acquired the entire Purchase Debt Ledger (PDL) and other selected assets (including plant & equipment, intellectual property and the Sydney lease) from ACM Group Limited (“ACM”).
ACM has positioned itself as one of the largest privately-owned collection agencies in Australia. Post the completion of the transaction, ACM will cease its operation of collection. Also, the founder of ACM will retire from the group.
By the end of March 2019, the transaction is expected to complete with the total cash consideration worth $40.3 million. The acquisition of ACM will be funded through the cash reserves of the company and the expansion of the facility worth $50 million, which will be financed through the banking partners of CLH. CLH, being watchful to other opportunities, has approximately $33m residual capacity and access to another $100 million off balance sheet financing due to its relationship with Balbec Capital LP.
The acquisition of ACM will require the addition of headcount as well as the hiring of selected Sydney-based employees of ACM. It will result in expanding the presence of CLH in New South Wales. ACM has expertise in the Australian telecommunication market and will provide a useful diversification to CLH’s banking debt recovery capabilities. The company expects that through its customer portal technology, analytics and training, there might be an additional benefit to the collectability of the outstanding book.
The agreement is based on many customary terms and conditions which includes approval from the third party.
On 4 March 2019, the company also announced the increase in the salary of the CEO after the positive half-yearly results followed by the finalization of an external remuneration review done by PWC. The base salary of the CEO, Anthony Rivas is now $470,475 per annum which is backdated to 1 September 2018 to align the annual salary review of the company.
On 27 February 2019, the company announced its half-yearly results for the period ended 31 December 2018. During the period, the Group’s revenue went up by 4% to $63.4 million as compared to the previous corresponding period. There was an increase in the normalized Group EBIT by 6% on pcp to $15.9 million. The revenue through the Purchase Debt Ledger segment went up by 12% to $34 million on pcp. The net profit after tax during the period was up by 3.3% to $8.5 million. The company declared a dividend of 4.1 cents which is up by 5.1% on pcp.
On 31 January 2019, the company acquired Receivables Management Limited, which is a New Zealand based company, for NZ$1.4 million through the existing finance facilities of the company.
On 22 January 2019, the company also made $8.5 million equity investment in Volt Corporation Ltd, a holding company of Volt Bank Ltd.
In the previous six months, the stock has generated a negative return of 12.78%. However, in the previous three months, the stock has generated a return of 1.87%. By the end of the trading session on 4 March 2019, the closing price of the stock was A$1.34, down by 1.832%, as compared to the previous trading day’s closing price. The company has a market capitalization of A$188.6 million with 138.17 million outstanding shares and a PE ratio of 7.07x.
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