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Ferret's Stock to Watch: COLLECTION HOUSE LIMITED
09:35, Tuesday, 17 January 2012

CLIMATE RIGHT FOR AN EVEN BETTER PROFIT PERFORMANCE

Sydney - Tuesday - January 17: (RWE Aust Business News)
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OVERVIEW
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The Ferret drew investors attention to Collection House (ASX:CLH)
last July when the price was little changed from yesterday's price of
77c.
But it's a much stronger company today with significantly better
prospects.
Since then business has increased dramatically, while yesterday
the company reported it had secured debt purchase agreements tendered
during the six months to December 31 with an estimated investment value
of $61 million.
The $61 million of commitments to purchased debt ledgers in the
first half of FY12 already exceeds the total PDL investment of $49
million in the full FY11 period.
CLH has previously advised an FY12 PDL investment target of
$60-$70 million.
"Securing the majority of our FY12 target in the first half
leaves us well placed to increase revenue in the second half." said CEO
Matt Thomas.
"We have experienced pricing consistent with historic norms while
supply levels of consumer debt for sale appear plentiful, so we expect to
be able to purchase very selectively in the second half."
Amongst PDL commitments made during the first half, five
contracts were with organisations which did not sell debt to CLH in FY11,
and two were first-time sellers.
In an innovative development, consumer electricity and gas
accounts were purchased from an energy retailer, being a new market for
PDLs that CLH has been researching for some time.
As an established market leader in contingent energy collections,
the purchase of energy debt is a logical market opportunity and it is
expected that this first Australian energy PDL sale will lead to similar
transactions for CLH.
CLH also secured another first during the 1H12, being a forward
flow debt sale of Part IX insolvency debt.
The commission (contingent) collections segment has also
experienced growth during the first half, compared to the previous
corresponding period.
Collection House is scheduled to report its first-half results on
February 25.
At the annual meeting last October, chairman John Pearce said
that over the past four years, the company has enjoyed good success, and
the Board is dedicated to continuing that success and expanding upon it.
"We are working on moderating our gearing without constraining
our growth," Mr Pearce told shareholder.
We want to maintain our dividend at a high yield but slightly
reduce our payout ratio, (down from 60 to 65 per cent to 50 to 60 per
cent) which will achieve an optimal outcome for shareholders.
"Overall conditions look favourable for the rest of this
financial year and your Board will work hard to maximise the outcome for
all shareholders," the chairman said.

SHARE PRICE MOVEMENTS
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Shares of Collection House yesterday rose 2c to 77c. Rolling high
for the year is 82c and low 67c. Dividend 6.2c to yield 8.05 per cent.
Earnings per share is 10.4c and price/earnings ratio is 7.4. The company
has 104.2 million shares on issue with a market cap of $80.2 million.

Collection House last year reported a strong 2011 profit result
of $10.1 million after-tax, representing 10.4c a share, and re-affirmed a
four-year underlying revenue and earnings growth trend.
This result was 13 per cent ahead of the $8.9 million after-tax
profit in 2010.
New debt purchases of $49 million were made in 2011, up 65 per
cent from $29 million in 2010 and $34 million in 2009, leaving the
business well positioned for continued revenue and earnings growth in
2012.
The company aims to invest up to $70 million in new purchased
debt tranches in 2012, greater than any amount announced by other debt
buyers in the Australian market.

BACKGROUND
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Collection House Ltd is Australia's leading receivables manager.
The company joined the ASX on October 4, 2000.
The Collection House group of companies employs over 560 trained
personnel in nine Australasian locations.
The group focuses on providing receivables management, debt
purchasing and debt collection services in all Australian states and
territories and throughout New Zealand.
In February 2002, Collection House created the Financial Basics
Foundation with the primary objective of educating Australian secondary
students about the credit system and responsible financial practices.
More than 1,540 secondary schools across Australia are now using
the Foundation's programs which are provided free of charge.
Collection House has contributed $1.35 million toward this work
since the Foundation's inception.
Its core business is providing receivables management, debt
collection, debt ledger purchasing and legal services to support those
collection activities.
The company enjoys strong business relationships with major
Australian and international banks, financial institutions, insurance
houses, large corporations, public utilities and governments.
ENDS