Ferret's Stock to Watch: COLLECTION HOUSE LIMITED08:56, Tuesday,...

Ferret's Stock to Watch: COLLECTION HOUSE LIMITED
08:56, Tuesday, 26 July 2011

A COMPANY THAT IS LIVING UP TO ITS NAME

Sydney - Tuesday - July 26: (RWE Aust Business News)
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OVERVIEW
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COLLECTION HOUSE LTD (ASX:CLH) is in the money business and doing
a good job at it.
The company expects to report a strong full-year result, buoyed
by "very positive results" in the final quarter.
Operating profit is expected to be in the range of $14.3 million
to $14.5 million (up 25 per cent) and net profit about $10 million (up 13
per cent).
Earnings per share is forecast around 10c.
Purchased debt accounts under arrangements are up 20 per cent at
$152 million.
Cash flow from operations is expected to be in the range of
$46-$47 million (up 17 per cent) and cash flow per share 47c-48c.
The smell of money in the jar means shareholders should be
getting their share, reflected by 6.1c to yield 7.77 per cent.
Credit facilities extended from $85 million to $100 million in
support of additional growth, with loan valuation ratio (LVR) increased
to 55 per cent reflecting lower risk profile.
Meanwhile, at the end of last month, Collection House announced
it was going to expand its range of services.
Collective Learning and Development Pty Ltd is an established
training company and registered training organisation which has been
providing training services to CLH staff since 2008.
This fully owned subsidiary of CLH has commenced marketing
training services to corporate and government clients, and has recently
completed its first national training contract for a Federal Government
department.
Cashflow Accelerator Pty Ltd is a new subsidiary which resulted
from identifying valuable capabilities within the CLH group which can be
leveraged to fulfil known market needs.
The primary objective of Cashflow Accelerator is initially to
investigate and report on a business's credit risk management policies
and procedures with an end goal of improving credit management options
and ultimately optimise business cash flow.
These new services are expected to deliver modest revenues in
FY12 but grow over time, while also complementing existing services.

SHARE PRICE MOVEMENTS
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Shares of Collection House yesterday rose 5.5c to 78.5c. Rolling
high for the year is 84c and low 61.5c. Dividend is 6.1c to yield 7.77
per cent. EPS is 8.8c and price/earnings ratio is 8.92. The company has
97.3 million shares on issue with a market cap of $76.3 million.
In the latest letter to shareholders, chairman John Pearce
advised of the continued growth in revenues and pre-tax profit, along
with the increased fully franked dividends.
"Our debt buying division continues to grow and it is worth
noting that we expect to increase spending on new debt from an average
over the past three years of $30 million to between $45 and $55 million
this year," he said.
"The benefit of increased revenues in the next three years should
be the result of that increased purchase level.
"Now with over 10 years experience, including the purchase of
over 1,300 individual portfolios with a face value of in excess of $3.5
billion, we have both the historical data and the analytical skills to
evaluate more accurately than ever before, portfolios that are available
for sale."

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.
The company enjoys strong business relationships with major
Australian and international banks, financial institutions, insurance
houses, large corporations, public utilities and governments.