Collection House Limited (ASX: CLH), established in 1994, is an Australian receivables management company that provides firms and individuals with world-class solutions in credit management, collections and customer care in Australia and New Zealand. It operates under a number of brands covering a plethora of products and services.
On April 5th, 2019, Collection House announced the completion of acquisition of the Purchase Debt Ledger (PDL) book and other selected assets of ACM Group Limited at a cash consideration of $ 40.3 million, planned to be funded from cash reserves and the expansion of the Company’s banking facilities. ACM has an impressive portfolio of projects in Australia.
With respect to this transaction, a one-off acquisition and integration cost of $ 1.3 million will be incurred by the company in FY2019.
According to the Managing Director, the acquisition is expected to be earning accretive, may provide a beneficial uplift to their arrangement book, further improve the cash collections and represent significant opportunities for growth. Following this recent milestone, Collection House confirmed its expectation to reach the top-end of the EPS guidance of 15.5 cents per share on a normalised basis while ACM is anticipated to contribute around $ 5.5 million to EBIT in FY2020.
Collection House has also declared an ordinary fully paid dividend of AUD 0.041, paid out on March 28th, 2019 (Record date March 5th, 2019), with respect to the six-month financial period ended December 31st, 2019.
On January 31st, 2019, the company informed the market that it had acquired New Zealand-based Receivables Management (NZ) Limited (RML) for a total consideration of NZD 14.1 million (~ AUD 13.4 million), financed from the company’s existing facilities. With an established position as a leading provider of consumer and commercial debt collection services in the debt sale market of New Zealand, the RML operations are expected to generate an EBIT of at least AUD 2.75 million in FY2020.
Also, in the same month, Collection House executed an $ 8.5-million equity investment (acquiring a stake of 4.5%) in Volt Corporation Ltd, which is the holding company of Australia’s digital bank, Volt Bank Ltd.
As per the financial results for the first half of 2019 ended December 31st, 2018, the company’s revenue stood at $ 66 million, up 4 % on $ 63.4 million recorded in the prior corresponding period (pcp) ended December 31st, 2017. The Normalised Group EBIT of $ 15.9 million was also up by 6% on pcp.
As for the segment wise contributions, the Purchase Debt Ledger segment generated revenue of $ 34 million, up 12% on pcp, Collection Services reported revenue of $ 32.2 million which was down 3% on pcp due to some deferred client revenue which led to a weak seasonal period.
Collection House has a market valuation of $ 174.1 million to date. On April 5th, 2019, the CLH stock price closed the market trading at $ 1.230, down by 1.6%.
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