ANNUAL REPORT 2021
104 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
OUR PURPOSE
Reimagine
how debt
is done.
Better.
Collection House acknowledges the
Aboriginal and Torres Strait Islander
peoples of this nation. We acknowledge
the traditional custodians of the lands on
which our company is located and where
we conduct our business and pay our
respects to their Elders and ancestors
past, present and emerging.
We solve complex
financial problems
by focusing
on human
connections.
COLLECTION HOUSE LIMITED
ACN 010 230 716
CONTENTS
2
Chairman’s Report
4
Chief Executive Officer’s Report
7
Corporate Social Responsbility Report
10 Board of Directors
12 Executive Leadership Team
14 Corporate Governance
15 Directors’ Report
37 Auditor’s Independence Declaration
39 Income Statement
40 Statement of Comprehensive Income
41 Balance Sheet
42 Statement of Changes in Equity
43 Statement of Cash Flows
44 Notes to the Financial Statements
94 Directors’ Declaration
95 Independent Auditor’s Report
99 Shareholder Information
101 Corporate Directory
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 1
A better
approach.
OUR VALUES
BETTER
EXPERIENCE
We show up every
day to better the
lives of others.
BETTER
SOLUTIONS
Constantly
improving to
deliver exceptional
outcomes.
BETTER
CONNECTION
Building a better
place to work is
the responsibility
of every one.
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 1
The release of this announcement was authorised by the Company’s Board of Directors.
2 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
Chairman’s
Report
MY FELLOW SHAREHOLDERS
The past year has been particularly
challenging for many of our customers
and our communities with the continuing
health, social and economic impacts of the
COVID-19 pandemic.
Despite these ongoing challenges, our people have
transformed the business to provide a new level of
support and value to our customers and clients. We have
also built better and stronger connections with strategic
partners within the communities in which we operate.
I am particularly proud of how we have supported
customers in need, and how our people have adapted to
the many and continuing challenges of the pandemic.
Our teams across Australia, New Zealand and the
Philippines continue to be resilient and tenaciously
focused on recovery and delivery in these tough times.
A changing operating environment
A new standard of ethical, customer focused service is
required from the debt collection industry. Debt recovery
practices are, and will continue to be, under scrutiny
by regulators and all our clients who require a more
empathetic approach to supporting customers, especially
those experiencing vulnerability and hardship.
To this end, the Company has continued to transform the
way we do business this year, redefining our purpose and
values to create a better approach to serve our customers
and clients, and creating more sustainable outcomes for
all stakeholders.
COVID-19 and associated local lockdowns continue
to present challenges to the way we connect with our
customers, and a significant proportion of the customer
base has been subject to client-imposed contact
restrictions for the majority of the last year. As vaccination
levels increase, a return to more normal operating
conditions in the Collection Services business is expected
over the coming months.
During the year the Company has bid on a number of
debt purchasing opportunities, but prices have so far
been prohibitive. Until more sustainable market conditions
return to the purchased debt market, the Company
will continue to evaluate opportunities and proceed
cautiously, but in the long term we remain focused on a
co-investment approach to purchasing debt portfolios,
which will see us invest a substantially lower level of the
Group’s capital and generate a higher return on equity.
Challenging results in challenging times
We acknowledge that the financial performance of the
Group has been disappointing. The Group reported an
accounting loss of $32.0 million for the year ended 30
June 2021. This includes material restructuring costs and
other non-recurring charges that arose as the Company
completed its transition to a capital light business model
and reduced its fixed overhead cost structure.
The underlying operating loss of $15.3 million for the year
reflected a significant reduction in contingent collection
revenues as a result of COVID-19 related collection
restrictions, and little contribution from purchased debt
assets. The Collection Services business, now the Group’s
primary operating segment, experienced challenging
market conditions because of fluctuating client referral
volumes during the COVID-19 lockdowns. The Company’s
overhead costs have been significantly reduced year on
year, and are being managed to support future growth and
profitability. In light of the poor economic performance for
the year, the Executive Leadership Team forewent short
term incentives and were not issued any securities under
the Company’s long term incentive scheme.
Importantly, our client relationships remain strong and,
despite difficult market conditions, the Company has
secured significant new client opportunities that will
result in an improvement in underlying revenue as market
conditions stabilise.
Along with the Board and Management, I sincerely regret
that CLH shares had to remain in suspension until early
January 2021 due to the sale of purchased debt assets,
and that we were unable to pay a dividend in respect of
last year’s operating performance. Following last year’s
Strategic Review, the business has commenced a multi-
year transformation program that will see it become a more
sustainable and effective services business moving forward.
In particular, the Company is committed to recommencing
the payment of dividends as soon as possible.
Our efforts to reimagine and improve the business are
now delivering encouraging results, with strong support
and encouragement provided by customers, clients and
stakeholders, including our senior lenders. However, these
improvements are not yet reflected in the Company’s
financial performance, as the benefits of the multi-year
recovery journey we described last year have been slow to
start, because of the ongoing social and economic effects
of COVID-19 impacting activity levels across the sector.
We are excited to play
our part in fundamentally
shifting the traditional
perceptions of debt recovery
A better approach
During the financial year the Company has continued to
listen to our customers, clients, and the wider community
to make important changes to the way we do business.
We have adapted our collection strategies and
strengthened our resolve to deliver better outcomes
for customers. We have been working on a new
approach, under a renewed organisational purpose to
Reimagine how debt is done. Better.
We believe there is an exciting opportunity for Collection
House to differentiate itself through an improved customer
service model that is focused on better customer
outcomes, underpinned by a solid governance framework
and technology designed to deliver a better customer
experience.
The Board and Management team believe that this deeply
embedded purpose gives direction, keeps us aligned and
challenges us to improve everything we do. Every person
in our team at Collection House continues to work hard
to make this happen by delivering better experiences,
offering better solutions to our customers and clients,
and building better connections both at work and within
our communities.
The core values that Collection House will embrace to
deliver on its purpose are:
1. Better Experience
2. Better Solutions
3. Better Connection
These values will help our people focus on creating better
customer experiences every day, providing better IT
and process solutions, and building deeper relationships
with each other, our customers, our clients and the
wider community.
As part of reimagining how debt collection can be done
better, the Company is putting the customer at the
heart of everything we do and providing empathetic
and compassionate engagement, in particular for those
experiencing hardship, vulnerability, and other forms of
financial exclusion. To this end, we have developed a
Customer Charter to focus our efforts and assure our
customers that we care about them and are committed to
delivering the right solutions with integrity and empathy.
In conjunction with our revised organisational values,
we believe the Customer Charter is key to innovation
in the way we operate and will drive sustainable
differentiation from our competitors. The Charter links
directly to our values of delivering better customer
experiences, solutions and connections that will guide
our future success.
We are excited to play our part in fundamentally shifting
the traditional perceptions of debt recovery with our
human centred, customer centric approach to doing
business with compassion.
We are excited to play our part in fundamentally shifting
the traditional perceptions of debt recovery with our
human centred, customer centric approach to doing
business with compassion.
Outlook
The year ended 30 June 2021 has been another
challenging year and with the backdrop of the pandemic,
one of the most challenging periods in the Company’s
history. Everyone at Collection House has worked
extremely hard to continue to adapt to the changing
environment and transform our strategy to address
more sustainably the challenges that confront our clients
and customers.
As always, our employees are dedicated to ensuring the
best and fairest outcomes for our customers and clients.
The Directors recognise and appreciate the ongoing
commitment and contribution of our people, management,
and the Company’s advisors toward achievement of
Collection House’s revised strategy, purpose and values.
The refinancing of the Group’s senior debt during the
year reflects confidence in Collection House’s long-
term prospects, and the Company continues to explore
opportunities to further optimise its balance sheet and
identify sources of capital to support expansion over the
coming year.
With good prospects for growth and some exciting
opportunities ahead, I believe our new strategy and
the actions taken this year to transform the business
will bring success, and will enhance shareholder value
as the economy starts to return to normal over the next
financial year. .
LEIGH BERKLEY
CHAIRMAN
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 3
4 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
Chief Executive
Officer’s Report
OVERVIEW
Over the last year, Collection House
has continued a rigorous process
of transformation and change.
Our objective has been to build a better
and more sustainable business through
redesigning our approach, to better
serve our customers, clients and the
wider community. Based on feedback
from a wide range of stakeholders,
we have challenged ourselves around
the need to deliver improved customer
experience and support for our customers,
particularly those experiencing
vulnerability and hardship.
Commercially and socially, it has been another challenging
year for the business, with disruption and change
continuing to be key themes in the day-to-day lives of our
clients, customers and our people.
The Group reported an accounting loss of $32.0 million
and an underlying operating loss of $15.3 million for the
year ended 30 June 2021.
After excluding non-recurring restructuring costs and
asset value adjustments, the underlying operating
loss of $15.3 million for the year reflects a significant
reduction in contingent collection revenues as a result
of COVID-19 related collection restrictions. It also reflects
a comparatively lower economic contribution from the
Company’s reduced portfolio of purchased debt assets.
The Company’s overhead costs have been significantly
reduced year on year, and are being carefully managed
to support future growth and profitability. By year end the
Group had reduced its net debt to $53.9 million, down
from $205.2 million the previous year, and a net gearing
ratio of 58% reflecting an acceptable level of debt in
light of the Company’s restructured balance sheet. As a
consequence of the sale of its purchased debt assets,
the Group has access to substantial carried forward tax
losses, $56.4 million of which are carried on balance
sheet as tax assets. These losses will be available to
offset the Group’s taxable income in future periods.
The business remains well placed for recovery, with a
portfolio of long-term clients and the people, systems and
processes to deliver empathetic and effective receivables
management and services prioritising customer service, as
the stabilisation of the credit sector inevitably occurs.
The revenue generation capacity of the existing client
portfolio and the organic growth opportunities we are
currently pursuing, provide an attractive long-term outlook
for the business. We remain well positioned to pursue
opportunities in the purchased debt sector in line with our
co-investment approach with capital partners, when supply
and pricing dynamics ultimately stabilise. Year on year,
the Company has reduced annualised group overheads
substantially, but sufficient capacity and capability remain
to support significant future growth in both the contingent
collection and purchased debt segments.
Our purpose and commitment to
greater social impact
Collection House has an important role to play in
serving clients and customers, but also ensuring we
are making a positive contribution to address the direct
and indirect drivers of financial exclusion. It is part of our
organisational values and philosophy that we can make
a more positive impact in the communities we serve.
Our actions each day impact how our customers access
financial services both now and into the future, and can
influence how those customers will perceive our clients’
brands as we help them find sustainable debt repayment
solutions. Putting the customer at the heart of everything
we do is fundamental to managing these dynamics, but
also ensuring we deliver these services to the highest
standards of conduct and regulatory compliance.
With the ongoing economic and social challenges brought
about by COVID-19 continuing to impact a significant
portion of our customers, it is more important than ever
that we do the right thing in delivering appropriate and
sustainable solutions for our clients and customers.
To achieve this, we have established a clear, renewed
organisational purpose that is to Reimagine how debt is
done. Better.
Another important element is our ongoing commitment to
enhanced levels of Environmental, Social and Governance
(ESG) activity, the Company is well advanced in designing
a new employee-led Corporate Social Responsibility
(CSR) program, on promoting greater financial inclusion.
Financial inclusion is the availability and equality of
opportunities to access useful and affordable financial
products and services that meet customer needs.
The promotion of financial inclusion is an important global
sustainability principle, but importantly overlaps directly
with the work Collection House does on a daily basis.
Working with customers to develop sustainable solutions
to manage outstanding debt is instrumental in advancing
the principle of financial inclusion.
Our aspiration however, is that our CSR program will
go further and enable us to make a more meaningful
contribution to address the complex financial and social
challenges which arise from the long term effects of
financial exclusion. The program will have two aspects:
• Firstly, a focus on individuals. We are enhancing our
direct support for customers experiencing vulnerability
and providing new development opportunities for our
own people, to promote healthier and more fulfilled lives.
• Secondly, a focus on partnerships. We will make
meaningful contributions in our local communities
through developing partnerships with organisations that
share our desire to improve financial inclusion for all and
have the capability to provide more social and other
support services for our customers where needed.
The Collection House Way
The commercial realisation of our vision of doing debt
collection better, is supported by four foundational
principles that underpin organisational strategy and
day-to-day operational execution. We will measure and
communicate our success against these principles with all
of our stakeholder groups as our transformation journey
continues. Focus on these areas will lead to sustainable
social and commercial outcomes for Collection House.
Customer
We will put the customer at the heart of everything we do
and provide empathetic and compassionate support. We
will strive to deliver industry leading customer experience
and measure our success through customer satisfaction
and net promoter score benchmarking. We will provide our
people with the highest standards of training, learning and
development and the best tools to create effective, human
centred engagement with our customers and clients.
We will shortly launch our Customer Charter, which will
set out the service promises our customers can expect in
every interaction.
Conduct
We will provide the highest levels of regulatory and
compliance assurance to our clients and customers
through industry leading systems and processes. We will
exceed statutory requirements and deliver solutions that
match customers’ unique circumstances. The Company’s
Corporate Governance Statement sets out how we will
ensure our conduct remains at all times significantly above
the standard required by the law, but also how clients and
customers will benefit from a service model designed
around delivering better experience and having greater
social impact.
Within the debt collection industry, our social license to
operate is increasingly important because of a renewed
focus on reputational risk management on behalf of our
clients. More importantly however, our conduct must be
of the highest standard, given our responsibility to deliver
the right outcomes for customers who are experiencing
challenging situations in their personal lives every day, in
particular those experiencing vulnerability and hardship.
Service
We will be the first choice for our clients by delivering
innovative processes and human centred design solutions
that align with their unique customer service objectives.
We are a service business and we serve customers,
through long-term partnership arrangements with our
clients. We believe that we can serve our customers
and clients better, through helping them solve complex
financial problems by focusing on human connections.
Contemporary digital engagement solutions can be used
to enhance customer experience, but in our view cannot
provide the empathetic human support that many of
our customers require. As such, we continue to favour a
balanced approach using multi-channel communication
supported by industry leading technology solutions.
What we ask our people to do every day is challenging
and we will continue to invest to ensure they have the
skills and resilience to meet our customer and client
service objectives. During the period, the Company
has made substantial investment in a new learning and
development strategy, focused on more holistic adult
development, in conjunction with enhanced technical
training on communication and compliance. Creating
pride in the Collection House brand and delivering an
industry leading employee experience for our people is
fundamental to creating a culture and team aligned to
the Company’s vision. We have made a good start in this
regard over the last year.
We see technology as a critical enabler for the delivery of
customer experience objectives and we plan to continue
to deepen our investment in our digital strategy and
technology platforms. Again, good progress has been
achieved over the last year in improving core systems
and development of a longer-term technology strategy
that matches our new vision. The coming year will see us
make further investment in our human centred approach
to customer experience and the use of data, insights
and reporting to deliver better outcomes for our people,
customers and clients.
Collection House has
reimagined how debt
collection can be
done better
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 5
6 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
Impact
Collection House is committed to helping our people,
customers and clients find deeper engagement and
better outcomes through shared social initiatives aligned
with our organisational purpose. We believe we have a
greater role to play in addressing the effects of systemic
financial exclusion that confront a significant portion of our
customer base.
Our aim is to transform our traditional debt collection
business into an organisation that understands its social
impact and makes a more tangible contribution to the
communities in which it operates. We are excited for the
imminent launch of our employee-led corporate social
responsibility strategy that will form an integral part of
how Collection House meets its environment, social
and governance responsibilities, but more importantly
becomes a greater force for good in our communities.
Outlook
Over the past two years, the Company has fundamentally
transformed its operating model and capital structure
and commenced a multi-year transformation journey
that will deliver sustainable value to shareholders and
stakeholders. The Company has substantially reduced
its debt levels and continued to enhance its service
capability through greater focus on the customer and
further investment in its people and systems. Through the
process of transformation and change, it is the intention
of Collection House to become the pre-eminent provider
of debt collection services, in all of its markets, based
on a foundation of delivering better customer outcomes
through market leading customer experience.
We expect activity levels within the first half of Financial
Year 2022 to remain subdued but are hopeful that market
dynamics will stabilise in the second half as Australia, New
Zealand and the Philippines roll out their COVID-19 vaccine
programs and move toward a greater level of economic
and social stability. While we acknowledge the ongoing
frustration of weak short-term earnings, we are resolute
that the transformation we are implementing across the
business is creating sustainable long-term value. We expect
the business to ultimately emerge into a sustained period
of demand for customer centric receivables management
services across both historical and emerging segments
within the financial services sector.
Management is confident that the repositioning of the
Company’s operating model will ensure a transition
to a business that serves its customers, clients and
communities better. We are optimistic about the growth
opportunities that our customer centric approach and
corporate social responsibility strategy will create for the
Company moving forward. We continue to receive positive
feedback on our transformation initiatives and our long-
term vision from clients. We are especially encouraged by
favourable customer feedback around their experiences
with us.
None of this would be possible without the ongoing
support of our shareholders and the guidance,
commitment and resilience of the Board, the Executive
Team and all of our people. Management and the
Board are working closely together to implement the
transformation strategy that we believe will ultimately
result in improved returns for our shareholders.
DOUG McALPINE
CHIEF EXECUTIVE OFFICER
Chief Executive
Officer’s Report (continued)
Corporate
Social
Responsibility
There is an increasing expectation among
investors and the community for financial
services organisations to establish and
demonstrate their social license to operate
not only in terms of good corporate
citizenship, but also as a reflection of
aligning values with prospective and
existing clients.
Following extensive internal strategic work, Collection
House has established The Collective Good – an
employee-led approach to Corporate Social Responsibility
(CSR).
The Collective Good incorporates a range of initiatives
that are already underway as well as future commitments
designed to achieve social impact and reinforce our
recovery and transformation.
Collection House’s intention is to:
1.
Create a range of employee-led corporate
responsibility and social impact programs
2.
Build support programs for our people beyond
traditional Learning and Development approaches
3.
Establish industry partnerships to achieve social
impact in a positive, enduring way.
The Collective Good as a CSR approach is built on two
pillars of contribution - individuals and communities.
Ultimately, our vision is to champion financial inclusion, to
enable better access to financial opportunities for all.
Contribution to Individuals
1. Customer vulnerability support
Providing support to vulnerable customers and
reporting on outcomes achieved.
2. Employee development initiatives
Providing our people with well-rounded skills to
better support those experiencing hardship.
Contribution to Communities
3. Not For Profit partnerships
Partnering with and supporting providers who
provide meaningful impact to the customer.
4. Procurement diversity
Working with businesses that support financial
inclusion for diverse groups.
Increasing Aboriginal
and Torres Strait Islander
representation in our
domestic workforce to 3%
by December 2022
20 different
cultural backgrounds
represented in
our workforce
64% of our workforce
and 57% of our leaders
are women
Fundraising for
Vinnies crisis and
homelessness
support services
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 7
“We commend Collection House
for being community-minded in
their ongoing support of Vinnies
Queensland. From clothing collection
drives, offering training facilities
for learning and strategy planning,
and actively participating in the
CEO Sleepout to raise funds for
homelessness services, our work
with Collection House has assisted
us in providing community support
where it is needed most.”
Kevin Mercer, CEO
St Vincent de Paul Queensland
8 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
IN ACTION
• Improvement and digitisation of hardship support program including use of plain language
• Greater front line delegations to support faster customer outcomes
Delivering the right support and outcomes for our customers who are vulnerable or experiencing financial hardship is
integral to our ongoing success. We continually assess our service delivery and customer hardship support programme
to ensure it continues to meet the needs of our customers and community. We measure our success against lead
indicators derived from our Voice of Customer feedback systems, complaint management systems, community
engagement initiatives and customer contact rates.
Focussed on delivering greater levels of support to our customers, we continue to seek ways to improve the support
we offer and remove barriers of accessing this support. An example of this is the significant work we’ve undertaken to
improve self-service options for customers to manage their account and seek hardship support at a time and manner
convenient to them.”
IN PROGRESS
• Establishment of a Financial Inclusion Action Plan
IN ACTION
• Learning & Development program rollout focused on being our best, inside and outside of work to serve our customers
• Employee ‘give back’ days to support the community and learn about challenges being faced
IN PROGRESS
• Development of Collection House’s first Reconciliation Action Plan, focused on the development of our people
In early 2021, we developed our First Nations Participation Plan (FPP) to guide the organisation in strengthening
employment and supplier opportunities for Aboriginal and Torres Strait Islander peoples and enterprise.
We have committed to increasing Aboriginal and Torres Strait Islander representation in our domestic workforce to 3
per cent by December 2022.
We acknowledge that while we have taken some small steps, far greater ones are still before us and we affirm our
commitment to taking them through the development of our first Reconciliation Action Plan (RAP).
The creation of our Reflect RAP will formally set out our commitment to reconciliation by setting goals for the
development of respectful relationships, creation of meaningful opportunities and improved cultural awareness across
the group.
Our RAP development is well underway and will be formally launched by early 2022.
Contribution
to Individuals
Customer vulnerability support
Employee Development initiatives
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 9
IN ACTION
• First organisation in the sector to partner with the Way Forward debt relief charity
• Strategic partnerships with Not For Profits such as Vinnies, Community Housing Providers and Domestic
Violence Support Service
• Sponsorship of state and national Financial Counselling Conferences
Throughout the year we have formed and strengthened partnerships with local not-for-profit organisations in the
welfare, community housing and domestic violence sectors. Collection House has been working closely with St Vincent
de Paul Queensland (Vinnies) on initiatives such as:
• CEO Sleepout, with Collection House raising funds for Vinnies crisis and homelessness support services;
• Support of the Skilling Queenslanders for work program through making our expansive, purpose-built training facilities
available to Vinnies so that important job seeker training could continue, socially distanced;
• Introduction of clothing recycling drop off points on each level of our Brisbane office;
• Exploring partnership opportunities for pro-bono delivery of learning and development to job seekers facilitated by our
subsidiary, Collective Learning and Development;
• Bulk donation of food to the Spring Hill crisis support hostel.
IN PROGRESS
• Increased sponsorship of Not For Profit initiatives such as Financial Counselling conferences across the nation
IN ACTION
• First Nations Participation Plan developed to increase opportunities for First Nations enterprises to work with
Collection House
• Engagement with First Nations recruitment service providers to support Collection House in identifying talent
IN PROGRESS
• Establishment of Procurement Diversity Targets and Policy
As an organisation we are committed to reflecting the diversity of the communities in which we operate. We are proud
of the fact that women represent over 64 per cent of our workforce and that 57 per cent of our Leaders are women.
80 per cent of our people feel they can be their authentic self at Collection House and 79 per cent feel the Company
values diversity.
Our people represent over 20 different cultural backgrounds, with one per cent of our domestic workforce identifying as
Aboriginal and/or Torres Strait Islander. We’ve committed to increasing First Nations representation in our workforce to at
least 3 per cent by December 2022.
To ensure we are meeting our commitments we have reshaped our recruitment processes so that they are focused
on identifying candidates that resonate strongly with our purpose, intent and organisational values and we continue to
invest in systems, processes and capability to support this objective.
Contribution
to Communities
Not For Profit Partnerships
Procurement diversity
10 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
Board of
Directors
EXPERIENCE
Having qualified as a Chartered Accountant, Mr Berkley has
more than 30 years’ experience in the collections and debt
purchase industry, is a past President of the Credit Services
Association (CSA) in the UK and assisted the Australian
Collectors & Debt Buyers Association (ACDBA) develop
their Code of Practice.
Having been granted Australian permanent residency
in 2019, Leigh stepped down from his role as Director of
External Affairs and Development of Arrow Global Group
Plc, one of the UK’s largest consumer debt purchasers, in
which he engaged with government and regulators, trade
bodies and consumer advice organisations.
Prior to this, he was the CEO and main shareholder of
Tessera Credit Group, a debt purchaser and collection
agency, which he led for over 16 years before successfully
negotiating a sale of its assets to Arrow Global in
December 2014.
Leigh was Vice President of the European trade body
FENCA where he led the development of a Code of
Conduct for GDPR for the Collections industry across
Europe and has been a regular presenter and industry
advocate at conferences and trade body forums around
the world. Leigh was also the 2019 President of the
International Collectors Group and is a Trustee of the Fair
Life Charity, and is an Ambassador and former Director of
the Money Advice Liaison Group in the UK.
Mr Berkley was appointed to the Board of Collection House
Limited on 1 July 2016.
Mr Berkley was appointed Chairman of Collection House
Limited on 29 November 2017.
SPECIAL RESPONSIBILITIES
Chair of the PDL Investment Committee
INTEREST IN SHARES
112,866 ordinary shares in CLH
EXPERIENCE
Mr Knox was an Australian Trade Commissioner serving
in Saudi Arabia and Indonesia. He joined Morgans (now
Morgans Financial Limited) in Sydney in 1988. He was
Chief Institutional Options Dealer until moving to Brisbane
in 1990 as Economist and Strategist. He joined the Board
of Morgan Stockbroking in 1996. He became Director of
Strategy and Chief Economist in 1998. Michael remained on
the Board of Morgans until 2012.
Michael has served on many Queensland Government
advisory committees. He was Chairman of the Queensland
Food Industry Strategy Committee in 1992, a Member of
the Consultative Committee of the Ipswich Development
Board in 1993, a Member of the Queensland Tourism
Strategy Committee in 1994 and a Member of the Ministerial
Advisory Committee on Economic Development in 1997.
From 2003 to 2012, he was Chairman of the Advisory
Committee of School of Economics and Finance at the
Queensland University of Technology. He has been a
Governor of the American Chamber of Commerce from
1997 to 2007. In 2008, Michael joined the Board of The
City of Brisbane Investment Corporation Pty Ltd. Michael
remained on the Board until 2016. Michael was the
President of the Economic Society of Australia (Qld) Inc
from 2009 to 2013.
Mr Knox was appointed to the Board of Collection House
Limited on 24 March 2017.
SPECIAL RESPONSIBILITIES
Nil
INTEREST IN SHARES
80,000 ordinary shares in CLH
Leigh Berkley
Independent, Chairman
Michael Knox
Independent,
Non-executive Director
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 11
EXPERIENCE
Catherine McDowell has more than 30 years’ experience in
the international investment and financial services industry
in senior executive and advisory roles, predominantly with
Barclays Bank, and more recently with ANZ.
She has more than 15 years of Board experience with not
for profit, listed and non-listed companies. Her current
roles include Independent Director for the Todd Family
Office, New Zealand and Independent Director of the AMP
Superannuation Board, and Chair of the Risk Committee.
Previously, as Managing Director of Barclays International
she oversaw a substantial international wealth business
before moving to New Zealand in 2005.
Catherine was the Managing Director at ANZ and the
National Bank Private Banking and Wealth business
(New Zealand).
She subsequently moved to Australia to build the
Private Bank and Trust business in addition to managing
the on-line broking business E-Trade. During her career
Catherine spent 10 years in New York, 15 years in
London and 8 years in New Zealand and Australia.
Catherine has a BA Hons, Management Diploma, is a
Fellow of the Institute of Company Directors, New Zealand,
a Graduate of the Australian Institute of Company Directors,
and an Affiliate of the Governance Institute of Australia.
Catherine was appointed to the Board of Collection House
on 17 September 2018.
SPECIAL RESPONSIBILITIES
Chair of the Remuneration and Nomination Committee
INTEREST IN SHARES
No ordinary shares in CLH
EXPERIENCE
Sandra Birkensleigh is a Non-Executive Director of MLC
Limited, Chair of the Audit Committee and a member of the
Risk Committee and Disclosure Committee.
Sandra is also a Chairperson and non-executive Director
of Auswide Bank, member of the Audit and Risk. She is a
Non-Executive Director of 7 Eleven, Chair of their Risk
committee, member of their Strategy Committee and a
Non-executive Director of Horizon Oil Limited, Chair of their
Audit Committee and a member of the Risk and Remuneration
and Nomination Committees.
Sandra is also an independent member of the Audit Committee
for the Reserve Bank of Australia, a Council Member and
Chair of the Audit and Risk Committee of the University of the
Sunshine Coast.
She is also a Non-executive Director of the National Disability
Insurance Agency and Chair of the Audit Committee and
member of the People and Remuneration Committee. She
is a member of the Investment Board for the Public Trustee
of Queensland and chairs their Audit and Risk Committee.
Sandra also sits on the boards of the Tasmanian Finance
Corporation (Tascorp) and is Chair of the Audit Committee.
She is a non-executive Director of Adore Beauty Limited, Chair
of its audit and Risk Committee and member of its People and
Remuneration Committee.
Previously, Sandra held the role of Senior Partner of PwC
until February 2013 and was the Global Head of Governance
Risk and Compliance Services for PwC for five years. Sandra
has a Bachelor of Commerce from University of New South
Wales, is a Chartered Accountant, a Graduate of the Australian
Institute of Company Directors and a Certified Compliance
Professional (Fellow).
Sandra was appointed to the Board of Collection House on
17 September 2018.
SPECIAL RESPONSIBILITIES
Chair of the Audit and Risk Management Committee
INTEREST IN SHARES
No ordinary shares in CLH
Catherine McDowell
Independent,
Non-executive Director
Sandra Birkensleigh
Independent,
Non-executive Director
12 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
Executive
Leadership Team
Doug McAlpine
Chief Executive Officer
APPOINTED NOVEMBER 2019
Doug was previously with Silver
Chef Limited where he served most
recently as the EGM of Australia and
New Zealand and prior to that, CFO.
Doug has previously held similar roles
in the resources, property and general
investment sectors. In addition to
strong financial and commercial
capability, Doug has a solid grounding
in receivables financing and extensive
experience working with the
professional investment community.
Doug began his career at Ernst &
Young. He is a Chartered Accountant
with twenty years of accounting and
finance experience, fifteen of which
have been as CFO with listed public
companies in Australia.
Jonathon Idas
Chief Legal Officer &
Company Secretary
APPOINTED SEPTEMBER 2017
Jonathon Idas was appointed as Chief
Legal Officer (“CLO”) on 6 September
2017. On 10 November 2020, he was
appointed as the Company Secretary.
Jonathon has more than 18 years’
experience as a solicitor in Australia
and the United Kingdom previously
being the CLO for Australian
Receivables Limited and Forbes
Dowling Lawyers Limited.
As CLO of Australian Receivables
Limited, Jonathon successfully
acquired Turnbull Bowles Lawyers,
strengthening firm’s position and
expanding legal services, client
engagement and productivity.
As a solicitor in the United Kingdom
his focus was helping clients navigate
successfully through the global
financial crisis, acting on large scale
litigation and pursuing cross boarder
insolvency matters.
Since joining the Company, he has
had oversight of all legal matters,
corporate governance, compliance,
and securities law.
Denica Saunders
Chief Operating Officer
APPOINTED JULY 2018
Denica joined the group in July
2015, following an extensive career
in the financial services industry and
operational management. Denica has
worked in senior roles leading large-
scale change programs specialising
in business transformation,
contact centre optimisation for
global organisations, industry,
peak bodies, Local and Federal
Government agencies.
Denica leads our operational teams
across Australia, New Zealand and
the Philippines. Drawing on over 15
years leadership experience at both
the operational and executive level,
Denica is instrumental in shaping and
executing CLH’s operational strategy,
delivering best-in-class solutions for
our clients and customers.
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 13
Peter Gunn
Chief Financial Officer
APPOINTED JULY 2021
Peter Gunn was appointed as the
Company’s Chief Financial Officer
(“CFO”) on 1 July 2021.
Peter is an experienced CFO with
a broad financial and commercial
background across a range of
industries including construction,
engineering, health and mining.
This includes significant experience
working with capital providers and in
managing organisational change. He
has been working with Company since
early 2020, assisting with the recently
completed recapitalisation process
and other financial matters. He holds
a Bachelor of Commerce from James
Cook University, Masters of Applied
Finance from Macquarie University, is
a Graduate of the Australian Institute
of Company Directors and a Fellow of
CPA Australia.
Peter replaces Ms Lynda Morris who
was the Chief Financial Officer since
January 2020.
Nathan Johnston
Chief Technology Officer
APPOINTED MARCH 2019
Nathan joined the group in March
2019, having worked in Information
Technology for over 25 years for
both large organisations and small
businesses within Australia and the
United States.
Nathan has also worked as a Software
Engineer and Technical Architect,
designing and building systems for a
variety of companies and industries.
He has managed highly productive
software engineering teams for
over 20 years, including offshore
development teams in the Philippines
for Australian-based clients.
Along with Nathan’s wide variety of
experience, he is also passionate
about bringing the best state-of-the-
art technology into the organisation –
to support our staff in supporting our
customers and clients.
14 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
Corporate
Governance
The Board of Collection House Limited and its Senior
Executives believe that our purpose and values are
embedded, expressed and supported by our Corporate
Governance System.
Our Corporate Governance System implements,
influences and shapes our employee’s perceptions,
conduct, assumptions, and behaviour towards risk,
compliance, assurance and their interactions with our
customers, clients, shareholders and the community.
Board Composition
Since 25 November 2019, the Board is comprised of four
Independent Non-Executive Directors.
The Board considers its current members to have
an appropriate mix of skills that enable the Board to
discharge its responsibilities, and deliver the Company’s
strategy and corporate objectives.
Board Committees
The Board is assisted in discharging its duties with the
assistance of the following Committees, each with its own
Charter stipulating its functions, powers and delegations:
• Audit and Risk Management Committee
• PDL Investment Committee
• Remuneration and Nomination Committee
Communication with Shareholders
Collection House Limited uses a range of methods to
communicate with shareholders, including written and
electronic communications. Shareholders are able to
make enquiries with the Group at any time through the
Investor Enquiries page on the Group’s website.
The Corporate Governance Statement
is available online
The Company’s listing on the Australian Securities
Exchange means it must comply with the Corporations Act
2001, the ASX Listing Rules and other Australian laws.
As part of its Compliance, Collection House Limited
(the Group) is required to disclose how it has applied
the recommendations contained in the ASX Corporate
Governance Council’s Principles and Recommendations –
4th Edition (the Principles and Recommendations) during
the financial year ending 30 June 2021, explaining any
departures therefrom.
The Group has, unless otherwise stated, followed the
Principles and Recommendations throughout the year.
More information about Collection House Limited’s
Board and Management, corporate governance policies,
procedures and practices is available in the Corporate
Governance Statement available on the website at
www.collectionhouse.com.au/investors-corporate-
governance under the heading Investors –
Corporate Governance.
The Board keeps the Corporate
Governance System under
regular review to ensure that
it adopts changes in law
and demonstrates the best
practice developments in good
corporate governance.
BOARD OF DIRECTORS
INDEPENDENT ASSURANCE
& ADVICE
BOARD COMMITTEES
Audit & Risk
Management
Assurance on adequacy
of risk management
and internal control
framework
Assurance on remuneration
framework and structure,
Board membership
& composition
Assurance on
purchase of debt ledgers
from both forward flow
and spot purchases
• External audit
• Internal audit
• External professional advice
CHIEF EXECUTIVE OFFICER
EXECUTIVE
LEADERSHIP TEAM
Remunerations
& Nominations
PDL
Investment
Assurance
and oversight
Delegated
authority
Accountable
to
Accountable to
Delegated
authority
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 15
The Directors present their report on the consolidated entity (referred to hereafter as the Company or the Group)
consisting of Collection House Limited and the entities it controlled for the financial year ended 30 June 2021.
Directors
The following persons were Directors of the Group during the whole of the financial period and up to the date
of this report, unless stated otherwise:
• Leigh Berkley – Chairman
• Michael Knox
• Sandra Birkensleigh
• Catherine McDowell
The Directors’ experience, special responsibilities and interest in shares appear at pages 10 to 11 of this Annual Report.
Company Secretary
Jonathon Idas was appointed as Chief Legal Officer (“CLO”) on 6 September 2017. On 10 November 2020,
he was appointed as the Company Secretary. He has oversight of all legal matters, corporate governance, risk,
and compliance.
Meetings of Directors
The number of meetings of the Group’s Board of Directors and of each board committee held during the year ended
30 June 2021, and the number of meetings attended by each Director were:
MEETINGS OF COMMITTEE
DIRECTORS
AUDIT AND RISK
MANAGEMENT
PDL INVESTMENT
REMUNERATION AND
NOMINATION
2021
ATTENDED
HELD
ATTENDED
HELD
ATTENDED
HELD
ATTENDED
HELD
Leigh Berkley
17
17
7
7
3
3
3
3
Michael Knox
17
17
7
7
-
-
3
3
Sandra Birkensleigh
17
17
7
7
-
-
3
3
Catherine McDowell
17
17
7
7
-
-
3
3
In addition, since the onset of COVID-19, the Board has met frequently as required by teleconference with the CEO and
members of the Executive Leadership Team and external advisors.
Principal activities and Key Changes
The Group provides debt collection and receivables management services from offices in Australia, New Zealand, and the
Philippines, and has two reportable segments: Collection Services and Purchased Debt Ledgers (PDLs).
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
16 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
A period of fundamental
organisational change
The financial year ended 30 June 2021 saw the
Group complete its first six months of trading under its
reimagined customer centric, service focused strategy.
During the year, the Company fundamentally transformed
its operating model and its capital structure. It has
embarked on a multi-year transformation journey that will
deliver sustainable value to the Company’s shareholders
and its stakeholders. As part of this transformation, the
Company has substantially reduced its debt levels and
enhanced its service capability through greater focus
on the customer and further investment in its people
and systems. Execution of this transformation strategy
was undertaken while continuing to provide the highest
standards of service to clients and customers during a
period of substantial disruption caused by COVID-19.
Under this strategy, the Company intends to become the
pre-eminent provider of debt collection services, in all of
its markets, based on a foundation of delivering better
customer outcomes through market leading customer
experience. To achieve this objective, Collection House
has reimagined how debt collection can be done
better and has re-focused its operations around four
foundational principles:
Customer
Putting the customer at the heart of everything we do and
providing empathetic and compassionate engagement,
in particular for those experiencing hardship, vulnerability,
and other forms of financial exclusion.
Conduct
Providing the highest levels of regulatory and compliance
assurance to our clients and customers through state-
of-the-art systems and processes focused on exceeding
statutory requirements and delivering tailored solutions
which match customers unique circumstances.
Service
Being the first choice for our clients by delivering
innovative processes and human centred design solutions
that align with their specific customer service objectives
and protect their reputation; and
Impact
Help our people, customers and clients find deeper
engagement and better outcomes through shared social
initiatives aligned with our organisational purpose.
A changing operating environment
In the operating environment post the Financial Services
Royal Commission and in the light of COVID-19, there
is a new standard of ethical, customer focused service
required from the debt collection industry. Debt recovery
practices are now a greater focus for all our clients and
reputational risk management requires a more compliant
and empathetic approach to supporting customers.
Engaging with customers in a consistent and effective
way on behalf of our clients has been challenging during
the year as a consequence of COVID-19. A significant
proportion of the customer base remains subject to client-
imposed contact restrictions making effective customer
contact difficult. Referral volumes are substantially lower
than the previous corresponding period and federal,
state, and local government opportunities have been
significantly restricted. That dynamic is expected to
continue in the short term while Australia, New Zealand
and the Philippines execute their COVID-19 vaccine
roll-out programs and move toward a greater level of
commercial and social stability.
These dynamics have also impacted the purchased
debt sector with significantly lower volumes of debt
available for purchase and consequently, significantly
higher prices being paid. The Company has evaluated
and bid on a number of debt purchasing opportunities
during the period, but prices have been prohibitive.
Until more sustainable market conditions return to the
purchased debt market, the Company will continue to
evaluate opportunities and proceed cautiously. The
Company continues to pursue a co-investment approach
to purchased debt assets, which will see it invest a
substantially lower level of the Group’s capital and
generate a higher return on equity.
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 17
Challenging results in the short term
The Group’s accounting loss of $32.0 million for the
year ended 30 June 2021 includes material restructuring
costs and other non-recurring charges that arose as
the Company completed its transition to a capital light
business model and reduced its fixed overhead cost
structure. The Company’s underlying operating loss for
the year of $15.3 million reflects a significantly lower
contribution from purchased debt assets, post the sale
of the Group’s historical purchased debt portfolio in
December 2020. The Collection Services business, now
the Group’s primary operating segment, experienced
challenging operating conditions because of fluctuating
client referral volumes during the COVID-19 pandemic.
Overhead costs have been reduced but are being
managed to support future growth and future profitability.
However, client relationships remain strong and despite
difficult market conditions the Company has secured
significant new client opportunities which will result in an
improvement in underlying revenue as market conditions
stabilise. The market has responded positively to the
Company’s transformation initiatives and customer
experience focus, and it is experiencing a high level of
client engagement as we explore how we can serve our
clients and customers better.
Longer term outlook
The Company expects activity levels within the first half
of FY22 to remain subdued but is hopeful that market
dynamics will stabilise in the second half. If market
conditions continue to remain depressed, the Company
anticipates another year of restricted growth and lower
accounting earnings. Regardless, the Group will continue
to focus on supporting existing clients and customers,
ensuring key collection services agreements are renewed
and on executing its transformation strategy.
The complexion of credit markets is changing, in response
to the need for improved customer outcomes and
managing the long-term economic impacts of COVID-19
on the global economy. Collection House has made the
difficult, but important decision, to fundamentally transform
its business model and establish itself as the preferred
provider of customer centric, receivables management
services. The Directors recognise the substantial costs
associated with this change but are confident that this
is the path to a more sustainable, better business for
the future.
CLH has largely eliminated the financial risk associated
with its historical purchased debt assets, substantially
reduced its debt levels, and greatly simplified its business
model. CLH has retained its best-in-class capabilities of
people, systems, and processes, allowing it to provide
end-to-end receivables management services to clients
and customers under either contingent collections
or purchased debt frameworks. The Company has
simultaneously reduced its overhead cost structure and
embraced a more agile approach that will see it realise
improved productivity over time.
The Company continues to carefully manage its working
capital and liquidity while the short-term operating outlook
remains challenging.
The Directors recognise and appreciate the ongoing
commitment and contribution of management, staff,
and the Company’s advisors toward achievement of
Collection House’s revised purpose and strategy.
Key Risks
Key risks to the Company’s outlook and strategy are:
• Continuing impacts of COVID-19 on general growth
in the credit sector and limitations on efficiently
conducting customer engagement to drive
collection activity.
• Changes to regulations governing collection activities
or breaching compliance obligations.
• Failure to retain existing or acquire new Collection
Services clients.
• Due to current market conditions, inadequate supply
of purchased debt at acceptable prices to create a
sustainable PDL pipeline.
• Disruption to systems and operation due to cyber-
attack or privacy breaches.
• Failure to maintain appropriate level of investment
in information systems to improve customer
experience; and
• Failure to attract and retain talent in a challenging and
changing market.
The Audit and Risk Management Committee provides
Board oversight to the management of risk mitigation
strategies that are implemented for the Group.
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
18 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
Overview of Group operations and financial results
2021
2020
CHANGE
%
Revenue ($’000)
75,327
151,647
(50)
Net Profit after tax for the year ($’000)
(31,990)
(145,070)
78
(Loss)/Earnings per share (cents)
(22.5)
(103.2)
78
Key elements of the result were:
• Consolidated Net Loss after Tax (NLAT) of $32.0 million (2020: NLAT of $145.1 million).
• Loss per share of -22.5 cents (FY20: Loss per share -103.2 cents).
• No PDL asset impairment adjustments were recognised during the period as the Company’s PDL assets had already
been adjusted to their recoverable amount in its 30 June 2020 financial statements.
• Earnings for the year included one-off non-recurring restructuring and transaction costs of $8.0 million and one-off
non-cash asset related accounting loss adjustments of $8.6 million.
• Closing gross assets of $146.1 million (2020: $343.9 million) and net assets of $39.8 million (2020: $73.1 million).
• Gross PDL asset sale proceeds of $157.7 million received and applied in immediate reduction to senior debt.
• Senior debt reduced to $61.6 million at December 2020 and refinanced for a further three years. As at 30 June 2021,
this balance had reduced to $51.1 million.
The Group is reporting a Net Loss after tax of $32.0 million for the year ended 30 June 2021 with the underlying
operating loss for the year being $15.3 million. Collection Services revenue was down $8.8 million (-14%) on the
previous corresponding period in light of the factors described above, but importantly will experience a significant
natural improvement when client referral levels return to more stable levels. Revenue from the remaining PDL assets
(predominately New Zealand based) was in line with expectations.
As part of its program of further business simplification and cost reduction, the Company brought to account
non-recurring, non-cash, asset valuation and other provisions totalling $8.6 million that contributed to the loss. On a
comparative basis, the Company has reduced annualised group overheads by approximately 24%. Notwithstanding
these reductions, the remaining overhead cost base reflects some excess capacity in the Group’s operating facilities,
information systems and governance frameworks that will support future growth and future profitability.
As at 30 June 2021, net cash on hand was $7.3 million with total senior debt post sale of purchased debt assets of
$51.1 million provided by two major Australian banks, maturing in January 2024. This refinancing outcome reflects a
strong level of confidence in the Company’s long-term prospects and support for its operating strategy moving forward.
The working capital loan extended as part of the purchased debt sale arrangement will be repaid out of tax refunds in
FY22 quarter 2.
The Group has net assets of $39.8 million, a current ratio of 1.1 and a net gearing ratio of 61%. These metrics are within
industry standards for a services business and reflective of the early stage in the organisation’s transformation process.
As a consequence of the sale of the Group’s purchased debt assets, the Group has net tax losses of $65.8 million,
$56.4 million of which are carried on balance sheet as a deferred or current tax asset. These losses will offset the Group’s
taxable income over the short to medium term, further improving the Company’s economic outlook.
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 19
Reconciliation of Underlying operating loss to Statutory loss before income tax
2021
$’000
2020
$’000
Statutory loss before income tax
(31,870)
(207,050)
Add back:
Restructuring expenses
8,007
63
Impairment – Right-of-use Asset
2,612
–
Impairment – Purchase Debt Ledgers
–
238,890
Derecognition of intangible asset work-in-progress
2,669
–
Loss on sale of Australian PDL assets
1,336
–
Other one-off costs
1,952
–
Underlying operating loss
(15,294)
31,903
Key financial results – by segment – Audited
COLLECTION SERVICES
PURCHASED
DEBT LEDGERS
CONSOLIDATED
2021
$’000
2020
$’000
2021
$’000
2020
$’000
2021
$’000
2020
$’000
Revenue
Sales
56,300
65,113
–
–
56,300
65,113
Interest and other income
–
–
19,038
86,746
19,038
86,746
Total segment revenue
56,300
65,113
19,038
86,746
75,338
151,859
Intersegment elimination
–
–
–
–
(11)
(212)
Consolidated revenue
56,300
65,113
19,038
86,746
75,327
151,647
Results
Segment result
441
8,706
(3,133)
42,550
(2,692)
51,256
Unallocated revenue less unallocated expenses
–
–
–
–
(5,654)
(9,602)
Restructuring expenses
–
–
–
–
(8,007)
(63)
Non-recurring one-off costs
–
–
–
–
(5,957)
–
Impairment of Right of Use
–
–
–
–
(2,612)
–
Interest expense and borrowing costs
–
–
–
–
(6,948)
(9,751)
Purchased Debt Ledgers: Impairment
–
–
–
(238,890)
–
(238,890)
Profit before tax
(31,870)
(207,050)
Income tax (expense)/benefit
(120)
61,980
Net Profit After Tax (NPAT)
(31,990)
(145,070)
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
20 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
Collection Services Segment
The Collection Services business collects debt and
provides customer service and hardship assistance
on behalf of clients (banks, public utilities, government
agencies, etc.). The fees received for these services were
$56.3 million for the 2021 financial year (2020: $65.1m).
The Company’s clients continued to be conservative
around collection activity as they consider the ongoing
impacts of COVID-19 on their customers and provide
extensive support to those customers who applied for
hardship assistance. Collection embargoes have extended
significantly beyond initial expectations with embargoes
ongoing during the year and some still in place linked to
the current lockdowns.
Purchased Debt Ledger (PDL) Segment
On 23 December 2020, the Group concluded a sale of its
Australian PDL assets (with effect from 1 October 2020).
The Company retained a small profitable portfolio of
PDL assets in New Zealand along with some minor value
Australian accounts.
The purchased debt business reported segment revenue
of $19.0 million reflecting normal trading performance for
quarter one, service fee income in quarter two related
to the sale, and reasonable performance from New
Zealand throughout the year. Overall, this was a subdued
performance over the year when compared with the
previous corresponding period, again largely driven
by customer behaviour linked to COVID-19 and some
resourcing issues in the second half.
The refinancing process has allowed the Company to
build relationships with several highly reputable, potential
co-investment partners who are looking for sophisticated
servicing partners in the Australian and New Zealand
markets. The Company is seeking to finalise one or
more partnering arrangement/s that will enable it to
appropriately pursue PDL purchasing opportunities, but
with a lower level of balance sheet risk. A couple of joint
bids have already been submitted but as noted above,
the lower-than-normal market activity with its resulting
non-competitive pricing is making this a challenge. This
situation is expected to normalise over time.
Cost Structure
Direct collection costs decreased on the previous
corresponding period, reflective of both strategy changes
implemented in FY20, but also generally lower levels of
collection activity period on period. Employee costs were
lower when compared with the prior year because of
the Job Keeper subsidy income in the first half that has
been offset directly against employee costs. In addition,
the company has proactively reduced resourcing levels
across the entire business.
Total employee numbers (Full Time Equivalents – FTE)
across Australia, New Zealand and the Philippines at
30 June 2021 stood at 698, compared to 740 in the
previous corresponding period as at 30 June 2020.
Capital Management
The Company now has a stable capital structure which
protects the core of its business and provides a base
upon which it can grow its collection services capability
over the coming years. Based on its operating plan, the
business has working capital funding for the next 12 to
18 months, which provides it with time to grow its services
business and implement a PDL co-investment partnership.
Coincident with completion of the PDL sale transaction,
the Company refinanced its remaining senior debt on the
following basis:
• $20m Fully amortising Term Loan Facility (Facility A)
with interest payable on a monthly basis and scheduled
quarterly repayments over a three-year term;
• $41.6m Term Loan Facility (Facility B) with a term of
three years, capitalising interest, and cash sweep
payments at times when the Group’s cash balance is
above a level agreed with the lenders;
• Bank Guarantee Facility of $8.6m which supports the
Company’s rental bond obligations; and
• a covenant compliance package focused on EBITDA to
leverage ratios.
The senior debt facility of $61.6m has already reduced
to $51.1m. As a part of the PDL sale transaction, the
purchaser has provided a loan of $15m with a maturity of
two years with interest capitalised during the term which
has already been reduced to $10m and is due to be
repaid in Quarter 2 FY22.
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 21
The Group’s total assets at 30 June 2021 were
$146.1 million, down 57% on 30 June 2020 primarily
as a consequence of the PDL asset sale. The Group
reported a surplus in net current assets of $2.0 million
as at 30 June 2021 (2020: deficit of $38.9m), with the
classification of the Group’s total borrowings reflecting
a more standard maturity profile other than a $10m loan
due payable during the first half of FY22.
Earnings per Share and Dividends
Basic Loss per share for the financial year was (22.5) cents
(2020: (103.2) cents).
Because of the poor economic performance for the
period, no dividends were paid or declared during the
period or subsequent to period end (2020: nil).
The Group’s ability to recommence an appropriate
dividend payment policy is governed by the new
arrangements with its lenders and is primarily linked to its
ongoing financial performance and available cash after
meeting its loan obligations. The Company is committed
to recommencing the payment of dividends as soon
as possible.
Significant changes in the state
of affairs
The company concluded its recapitalisation process in
December 2020. This resulted in the sale of the majority
of its Australian based PDL assets with the proceeds
applied to pay down the majority of its bank debt and
the existing lenders providing a new loan facility for
the difference.
There were no other significant changes in the state of
affairs of the Group during the financial year.
Matters subsequent to the end of the
financial year
To date, the company has managed its way through the
effects of the COVID-19 crisis, but the future impacts of
the virus are still uncertain given the recent outbreaks
and lockdowns. This continues to impact on Company
performance. While the expectations around duration
and impact of the crisis is improving but still unclear, the
Group is relatively well-positioned to continue to manage
through this.
Other than the matters discussed herein, there are no
other matters or circumstances that have arisen since
30 June 2021 up until the date of this report that have
significantly affected, or may significantly affect:
• the Group’s operations in future financial years;
• the results of those operations in future financial
years; or
• the Group’s state of affairs in future financial years.
Environmental regulation
The Group’s operations are not regulated by any
significant environmental regulation under a law of the
Commonwealth or of a state or territory.
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
22 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
Remuneration Report – AUDITED
This Remuneration Report outlines the overall
remuneration strategy, framework and practices adopted
by the Group for FY21 for Non-Executive Directors (NEDs),
the Chief Executive Officer and other Key Management
Personnel (KMP). It has been prepared in accordance with
the requirements of the Corporations Act 2001 (Cth), as
amended (the Act) and its regulations. The information
provided in this Remuneration Report has been audited as
required by Section 308(3C) of the Act. The Remuneration
Report contains the following sections:
A
Directors and other Key Management Personnel
disclosed in this report
B
Remuneration governance
C
Executive remuneration policy and framework
D
Relationship between remuneration and the Group’s
performance
E
Non-executive Director remuneration policy
F
Details of remuneration of Directors and Key
Management Personnel
G
Service agreements
H
Share-based compensation
I
Equity instruments held by Key Management
Personnel
J
Additional information
Introduction
The 2021 financial year has seen extraordinary challenges
in the external environment and the Group, and the credit
sector as a whole continues to experience significant
changes post the Financial Services Royal Commission
and in the wake of the longer-term impacts of COVID-19.
There is a higher standard of ethical, customer focused
service required from the debt collection industry and a
more compliant and empathetic approach to the delivery
of customer outcomes is needed in light of increased
public scrutiny on the financial services sector. Collection
House has repositioned its business to address this
challenge, reimagining how debt collection can be
done better.
Focussed on the pillars of customer, conduct, service
and social, Collection House has proactively responded
to industry and community demands and is seeking to
create sustainable long-term value for the Company’s
shareholders and wider stakeholders. This approach will
align the Group’s activities with how value is measured,
communicated to our stakeholders and ultimately how its
people, in particular key management personnel (“KMP”)
are rewarded.
Applying a values-based approach to the creation of
sustainable value requires an appropriate balance of
short-term financial performance with other qualitative
objectives that drive long term value creation. The
Company’s new organisational strategy aligned with
the remuneration principles set out below will provide
transparency and confidence that Collection House is
delivering sustainable long-term value for the Company’s
shareholders and wider stakeholders.
Within this context, the Company has implemented a
three-stage approach to its remuneration strategy.
Stage 1: Year ended 30 June 2021
Over the last twelve months and described in more detail
below, the Directors have exercised their discretion and
made no awards under either the Company’s short-
or long-term incentive schemes. While the Board is
convinced that the organisational transformation currently
underway will ultimately yield more sustainable value for
shareholders and other stakeholders, it acknowledges
the significant decline in shareholder value that occurred
during both FY20 and FY21. As such, the Board has
applied significant discretion regarding the award of short-
and long-term benefits to key management personnel:
• No short-term incentives were awarded to the CEO or
other KMP;
• No long-term incentive awards were granted to the
CEO or other KMP;
• Only minor fixed term remuneration adjustments
were awarded to KMP in line with previously agreed
commitments to move benchmark salary to the 50th
percentile of comparative role bandings determined
with reference to external benchmarking analysis. No
adjustment was made to CEO base compensation; and
• No adjustments were made to NED compensation
during the period.
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 23
Stage 2: Year ended 30 June 2022
Over the forthcoming financial year ending 30 June
2022, KMP will be incentivised to deliver the complex
transformation objectives described in this report, while
simultaneously focussing on day-to-day operational
execution. During this phase, underlying organisational
profitability will remain subdued and consequently a
significantly lower level of short-term incentive is justified.
Variable compensation will be awarded on the successful
implementation of specific performance indicators linked
to the four strategic pillars of customer, conduct, service,
and social impact underpinning the Group strategy. The
design and implementation of measurement and reporting
processes to evaluate value created across each of these
four areas will permit the Directors to recommence issue
of performance rights under the Company’s long term
incentive scheme during FY22. During the year ahead,
the Remuneration and Nominations Committee will agree
with management, the vesting criteria for those securities
subject to achieving pre-agreed measurable performance
targets against each of the four criteria. Those criteria
will be described in next year’s remuneration report. As
always, the Directors will continue to apply appropriate
commercial discretion in determining both the scale of
reward and the challenge in achieving vesting criteria.
Stage 3: Future financial periods
In future financial periods and in line with a return to
profitability, the Directors expect the Company to return
to a more traditional application of the short- and long-
term incentive schemes described in this report. A portion
of short-term variable compensation will be payable
subject to achievement of annual Group earnings targets.
The remainder will be subject to individual performance
targets agreed each year annually in advance. Long term
incentives will be awarded through performance rights
over ordinary shares in the Company issued under the LTI
plan previously approved by Shareholders and subject to
the annual vesting criteria.
This amended remuneration strategy is influenced
by the feedback we received from shareholders and
proxy advisors last year, where a significant portion of
the shareholder base voted against the Company’s
remuneration report. We have continued to engage with
shareholders and proxy advisors to gather feedback and
develop wider perspectives on how we can strengthen
our remuneration strategy and better align it to the
expectations of shareholders and the creation of long-
term value for all stakeholders.
The Company acknowledges that the previous application
of its short-term incentive strategy placed too great an
emphasis on short term accounting earnings, particularly
for the Chief Executive Officer and consequently will
assign a lower percentage of potential short-term reward
to the achievement of annual earnings targets.
In addition to the feedback gathered from stakeholders
and although not a regulated entity, we have also
considered guidance provided in CPS511 in respect of
establishing an appropriate remuneration framework. We
consider the principles set out in CPS511 as a minimum
standard of good remuneration practice for a financial
services organisation. The majority of the Company’s
historical remuneration strategy and disclosures (as set
out in this report) are already closely aligned with the
principles set out in CPS511. Moving forward, we will
continue to create stronger links between financial and
non-financial measures which determine awards under
both STI and LTI and key elements of the Company’s
revised strategy. In particular, we will ensure that for KMP
and all employees who benefit from variable remuneration
arrangements, only a restricted portion will be attributable
to financial performance and a much greater weighting
applied to achievement of qualitative criteria around
customer, conduct, service, and social impact outcomes.
Having regard to the sensitivity of these measures
to the quantum of award received by KMP and other
employees, the Board will continue to exercise its
discretion around the appropriateness of total reward. In
response to feedback from stakeholders, the Board will
also apply its discretion more strictly when considering
the appropriateness of clawback arrangements (for
both short- and long-term incentive payments) where
suboptimal shareholder or stakeholder outcomes are
identified in subsequent financial periods.
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
24 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
Director and Executive Remuneration
A Directors and other Key
Management Personnel
disclosed in this report
The key management personnel include those who have
the authority and responsibility, directly or indirectly, to
plan, direct and control the major activities of the Group.
THE GROUP’S DIRECTORS AND KEY MANAGEMENT
PERSONNEL FOR 2021
Board of Directors
Leigh Berkley
Chairman (Non-Executive)
Michael Knox
Director (Non-Executive)
Sandra Birkensleigh
Director (Non-Executive)
Catherine McDowell Director (Non-Executive)
Executive Leadership Team (ELT)
Doug McAlpine
Chief Executive Officer (CEO)
Company Secretary
(resigned 10 November 2020)
Lynda Morris*
Chief Financial Officer
(resigned 30 June 2021)
Anand Adusumilli
Chief Data Scientist
Jonathon Idas
Chief Legal Officer
Company Secretary
(appointed 10 November 2020)
Denica Saunders
Chief Operating Officer (COO)
Stephen Parrish
Chief People Officer
(resigned 14 May 2021)
Nathan Johnston
Chief Technology Officer
*
Lynda Morris Chief Financial Officer resigned 30 June 2021 and
Peter Gunn was appointed 1 July 2021
B Remuneration governance
Overall remuneration strategy, framework and practices
adopted by the Group are governed by the Board and
the Remuneration and Nomination Committee. These
functions include consideration of the following:
• How the remuneration policies are applied to members
of the ELT
• The basis of short and long-term performance-based
incentive payments for members of the ELT
• The appropriate fees for NEDs.
Fundamental to all arrangements is that all KMP
(Key Management Personnel) must contribute to the
achievement of short and long-term objectives, enhance
shareholder value, avoid unnecessary or excessive risk
taking and discourage behaviour that is contrary to the
Group’s values.
Details of the short and long-term incentive schemes
are set out below in the Section C: ‘Executive
Remuneration Policy and Framework’ section of the
Remuneration Report.
The objectives of the Group’s remuneration policies are
to ensure remuneration packages for KMP reflect their
duties, responsibilities, and level of performance – as well
as to ensure all KMP are motivated to pursue the long-
term growth and success of the Group.
In determining the remuneration of all KMP, the Board aims
to ensure that the remuneration policies and framework:
• Are fair and competitive and align with the long-term
interests of the Group;
• Incentivise all KMP to pursue the short and long-term
growth and success of the Group within an appropriate
risk control framework;
• Are competitive and reasonable, enabling the Group
to attract and retain key talent, knowledge, and
experience;
• Are aligned to the Group’s strategic and business
objectives and the creation of shareholder value;
• Have a transparent reward structure with a risk
proposition that is linked to the achievement of
pre-determined performance targets.
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 25
Use of external advisors
In performing its role, the Remuneration and Nominations
Committee may directly commission and receive
information, advice, and recommendations from
independent, external advisers. This is done to ensure the
Group’s remuneration packages are appropriate, reflect
industry standards and help achieve the objectives of the
Group’s remuneration strategy. No external advisors were
engaged during the year.
Securities Trading Policy
The trading of shares issued to eligible employees
under any of the Group’s employee equity plans was
subject to, and conditional upon, compliance with the
Group’s Securities Trading Policy. Members of the ELT are
prohibited from entering into any hedging arrangements
over unvested performance rights under the Group’s
Performance Rights Plan (PRP). The Group would consider
a breach of this policy as misconduct, which may lead to
disciplinary action and potentially dismissal.
C Executive remuneration
policy and framework
The Group’s executive remuneration strategy is designed
to attract, motivate, and retain high performing individuals
and align the interests of executives with shareholders.
The Remuneration and Nomination Committee and the
Board reviews the remuneration packages for members
of the ELT annually by reference to individual performance
against key individual and team objectives, the Group’s
consolidated results and market data. The performance
review of the CEO is undertaken by the Chair of the Board
who then makes a recommendation to the Board. The
performance review of the other members of the ELT is
undertaken by the CEO and approved by the Board.
The Group aims to reward members of the ELT with a level
of remuneration commensurate with their responsibilities
and position within the Group, and their ability to
influence shareholder value creation. The remuneration
framework links rewards with the strategic objectives and
performance of the Group.
The ELT pay and reward framework has three
components:
• Total fixed remuneration (TFR) including superannuation
and benefits;
• Short-term incentives (STIs), paid in cash or shares;
• Long-term incentives (LTIs) through participation in
the Performance Rights Plan (PRP), which has been
approved by the Board.
The combination of these components amounts to the
total remuneration package or total employment cost for
members of the ELT including the CEO.
Total fixed remuneration
Structured as a total employment cost package, the
total fixed remuneration (TFR) may be delivered as
a combination of cash and prescribed non-financial
benefits. Members of the ELT are offered a competitive
TFR that comprises the cash salary, superannuation,
and non-monetary benefits. The TFR for ELT members is
reviewed annually to ensure the pay is in line with the role,
experience and performance and remains competitive
with the market. Group and individual performance are
considered during the annual remuneration review.
The TFR is usually fixed for a 12-month period with any
changes effective from 1 September each financial year.
An ELT member’s remuneration is also reviewed upon any
change of duties.
Retirement benefits for ELT
There are no additional retirement benefits made
available to members of the ELT, other than those required
by statute or by law and under the shareholder approved
performance rights plans.
Short-term incentives (STIs)
To ensure that remuneration for members of the ELT is
aligned to the Group’s performance, a portion of their
remuneration, in line with their ability to influence results,
is performance based and, therefore, ‘at risk’.
ELT members have the opportunity to earn an annual STI
if pre-defined targets are achieved. The CEO will have a
target STI opportunity of 60 percent of TFR, which is cash-
based. Other ELT personnel each will have a cash based
STI opportunity of up to 25 percent of TFR.
When normally applied, there is a high degree of
alignment between the Company strategy and the
ELT’s STI performance objective targets. The financial
performance objectives (EPS and Net Profit after Tax) are
the same for all Senior Executives, providing a common
objective for the ELT. The non-financial ELTs have a
high degree of variability between technology projects,
people and culture, and processes that reflect the
individual roles, and include measures such as achieving
strategic outcomes, developing people and culture,
growth, business development, differentiation, innovation,
digital development, and other key initiatives during the
financial year.
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
26 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
Each executive has a high degree of clarity on their
individual performance objectives and priorities, as
established by their scorecard. They also understand
the inter-relationship of their individual performance
objectives to the objectives of the other members of
the ELT.
CEO STI targets for FY21 and FY20
Payment of the STI is discretionary and subject to the
requirement to achieve a minimum of 5% growth in EPS
in a financial year, as well as the achievement of the
individual personal objectives outlined below:
PERFORMANCE
CATEGORY
METRICS
WEIGHTING
(%)
Financial
– Earnings per share (EPS)
40
Non-Financial
– Leadership
20
– Innovative Solutions
implemented
10
– Improvement of
Corporate Culture
30
A summary of the actual STI Financial outcomes achieved
is included in Section D.
Cessation of employment
For resignation or termination for cause, any STI is
forfeited, unless otherwise determined by the Board.
For any other reason, the Board may award STI on a
pro-rata basis taking into account time and the current
level of performance against performance hurdles.
Long-term incentives (LTIs)
LTIs are awarded to the Group’s ELT by way of
performance rights via the Performance Rights Plan (PRP).
The LTI program has the objective of delivering long-term
shareholder value by incentivising members of the ELT to
achieve sustained financial performance over a three-year
period (with no opportunity to retest).
Annual grants of performance rights are proposed to be
made to the Group’s ELT under the PRP. The number of
performance rights granted is calculated based on the
weighted average share price over the five trading days
before the grant date. Sections H and I provide details of
performance rights granted, vested, exercised, and lapsed
during the year.
Performance rights are awarded to various eligible
employees pursuant to the PRP, at a nil exercise price and
subject to a three-year tenure hurdle. This is contingent on
the achievement of certain financial performance hurdles,
which are approved by the Board each financial period.
The performance rights will not vest unless the Group’s
financial performance meet these hurdles. The Board set
these hurdles to ensure that the ELT and eligible employees
were focused on the delivery of increased shareholder
value through the achievement of the short and long-term
goals of the Group. Participants in the PRP do not receive
distributions or dividends on unvested LTI grants.
FY21 Performance Rights Awarded
In recognition of the group’s performance, the Board did
not grant any unlisted FY21 performance rights during the
prior or current year under the PRP to the ELT and other
eligible employees.
A summary of any actual LTI Financial outcomes achieved
is included in Section D.
Cessation of employment
For ‘uncontrollable events’ (including death, serious injury
and disability and forced early retirement, retrenchment,
or redundancy), any LTI that is capable of becoming
exercisable if performance hurdles are met at the next test
date will become vested performance rights. The Board,
at its discretion, may determine the extent to which any
other unvested performance rights, that have not lapsed,
will become vested performance rights.
For any other reason, all unvested LTI awards will lapse
immediately, unless otherwise determined by the Board.
Change of control
Where a proposal is publicly announced in relation to the
Group which the Board reasonably believes may lead to a
change in control event, all unvested LTI awards that have
not lapsed, will vest, and become exercisable.
Clawback
The Group will reduce, cancel or clawback any
performance-based remuneration in the event of serious
misconduct or a material misstatement of the Group’s
financial statements.
Discretion
The Board has absolute discretion in relation to payments
under both the STI and LTI schemes.
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 27
D Relationship between remuneration and the Group’s performance
Group performance and its link to LTI
The overall level of reward for members of the ELT takes into account the performance of the Group over a number
of years, with greater emphasis given to the current and previous year. Details of the relationship between the
remuneration policy and Group’s performance over the last five years is detailed below.
2017
2018
2019
2020
2021
Net profit after tax ($m)
17.4
26.1
30.7
(145.1)
(32.0)
Dividends declared (franked) (cents)
7.8
7.8
8.2
Nil
Nil
Share price commenced
$1.10
$1.16
$1.49
$1.21
$1.08
Share price ended
$1.16
$1.49
$1.21
$1.08
$0.15
Basic Earnings/(Loss) Per Share (cents)
12.8
19.2
22.3
(103.2)
(22.5)
Details of remuneration: cash bonuses and performance rights
For each cash bonus and grant of performance rights included in the table on page 33 the percentage of the available
bonus or grant that was paid, or that vested, in the financial year, and the percentage that was forfeited because the
person did not meet the service and performance criteria, is set out below. Other than the deferred payment shares, no
part of the STI is payable in future years. No performance rights will vest unless the vesting conditions are met, hence
the minimum value of the performance rights yet to vest is nil. The maximum value of the performance rights in the
options reserve has been determined as the fair value of the performance rights at grant date.
No performance rights were awarded or forfeited during the year ended 30 June 2021 (2020: PR2019 was awarded
and forfeited during the year ended 30 June 2020).
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
28 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
E Non-Executive Director remuneration policy
Non-Executive Director’s (“NEDs”) fees are determined within an aggregate Directors’ fee pool limit, which is periodically
recommended for approval by shareholders. NEDs do not receive share options or performance rights. The maximum
aggregate fee pool and the fee structure is reviewed annually against fees paid to NEDs of comparable companies.
The Board considers advice from external advisors when undertaking the annual review process.
The maximum annual aggregate NED fee pool limit is $900,000 per annum, as approved by shareholders at the Group’s
Annual General Meeting as at 25 October 2013. The FY21 aggregate total NED fees distribution is $585,825 (including
superannuation).
Payments are allowed for additional responsibilities for the Chair of each Board Committee. Fees and payments to NED
reflect the demands that are made on, and the responsibilities of, the Directors.
The table below summarises the NED fees for FY21 (exclusive of superannuation):
FEES
2021
$
2020
$
Base fees
Chair
175,000
175,000
Other Non-Executive Directors
95,000
95,000
Additional fees
Audit and Risk Management Committee Chair
25,000
25,000
Audit and Risk Management Committee Member
Nil
Nil
Remuneration and Nomination Committee Chair
25,000
25,000
Remuneration and Nomination Committee Member
Nil
Nil
PDL Investment Committee Chair
25,000
25,000
PDL Investment Committee Member
Nil
Nil
For further information in relation to Directors’ remuneration, including fees paid in accordance with statutory rules and
applicable accounting standards, refer to Section F below.
Note that the changes in the NED fee structure do not require an increase in the Directors’ fee pool limit.
Retirement allowances for Directors
There are no retirement allowances paid to Non-Executive Directors.
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 29
F Details of remuneration of Directors and Key Management Personnel
Amounts of remuneration
Details of the remuneration of Directors and all other key management personnel (as defined in AASB 124 Related Party
Disclosures) of the Group are set out below.
SHORT-TERM
POST
EMPLOYMENT
OTHER
LONG TERM
SHARE-BASED
PAYMENTS
IN DOLLARS
SALARY
AND FEES
STI CASH
BONUS
NON-
MONETARY
BENEFITS
TOTAL
SUPER-
ANNUATION
BENEFITS
ANNUAL
AND LONG
SERVICE
LEAVE
TERMINATION
BENEFITS
RIGHTS
TOTAL
PROPORTION OF
REMUNERATION
PERFORMANCE
RELATED
Non-Executive Directors
LEIGH BERKLEY
Chairman
2021
202,368
–
–
202,368
19,085
–
–
–
221,453
2020
284,151*
–
136
284,287
19,561
–
–
–
303,848
MICHAEL KNOX
Non-Executive Director
2021
95,365
–
–
95,365
9,065
–
–
–
104,431
2020
95,731
–
–
95,731
9,095
–
–
–
104,826
SANDRA
BIRKENSLEIGH
Non-Executive Director
2021
120,461
–
–
120,461
11,451
–
–
–
131,912
2020
120,923
–
–
120,923
11,488
–
–
–
132,411
CATHERINE
McDOWELL
Non-Executive Director
2021
120,461
–
–
120,461
11,451
–
–
–
131,912
2020
120,923
–
–
120,923
11,488
–
–
–
132,411
*
within Salary and fees, Mr Berkley received $90,000 for his contribution to the project to improve the effectiveness and sustainability of the PDL
operational collection strategy during the year ended 30 June 2020.
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
30 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
SHORT-TERM
POST
EMPLOYMENT
OTHER
LONG TERM
SHARE-BASED
PAYMENTS
IN DOLLARS
SALARY
AND FEES
STI CASH
BONUS
NON-
MONETARY
BENEFITS
TOTAL
SUPER-
ANNUATION
BENEFITS
ANNUAL
AND LONG
SERVICE
LEAVE
TERMINATION
BENEFITS
RIGHTS
TOTAL
PROPORTION OF
REMUNERATION
PERFORMANCE
RELATED
Executive Director and other Key Management Personnel
DOUG McALPINE
Chief Executive Officer
(appointed
25 November 2019)
2021
501,923
–
5,065 506,988
47,711
15,453
–
–
570,152
–
2020
471,154
–
4,882
476,036
44,760
35,653
–
–
556,449
–
Company Secretary
(appointed 1 July 2019
and resigned
10 November 2020)
Chief Financial
Officer
(appointed 1 July 2019
and resigned
1 January 2020)
ANTHONY RIVAS
Managing Director/
Chief Executive Officer
(resigned
25 November 2019)
2021
–
–
–
–
–
–
–
–
–
–
2020
198,728
–
3,615
202,343
18,879
–
117,619
–
338,841
–
LYNDA MORRIS
Chief Financial Officer
(appointed
1 January 2020)
2021
220,385
–
5,065 225,450
20,949
33,024
–
–
279,423
–
2020
111,692
–
2,441
114,133
10,611
9,713
–
–
134,457
–
ANAND ADUSUMILLI
Chief Data Scientist
2021
254,904
–
10,120 265,024
24,233
22,516
–
–
311,773
–
2020
296,058
–
7,858
303,916
28,126
7,780
–
–
339,822
–
JONATHON IDAS
Chief Legal Officer
Company Secretary
(appointed
10 November 2020)
2021
320,919
–
–
320,919
30,506
20,033
–
–
371,458
–
2020
302,187
–
9,998
312,185
28,708
9,395
–
–
350,288
–
DENICA SAUNDERS
Chief Operating Officer
2021
345,885
–
5,065 350,950
32,879
1,522
–
–
385,351
–
2020
318,904
–
4,882
323,786
30,296
2,795
–
–
356,877
–
STEPHEN PARRISH
Chief People Officer
(appointed
1 January 2020 and
resigned 14 May 2021)
2021
227,260
–
5,065 232,325
27,389
(5,184)
78,461
–
332,901
–
2020
121,846
–
2,441
124,287
11,575
–
–
–
135,862
–
NATHAN JOHNSTON
Chief Technology Officer
(appointed
1 January 2020)
2021
220,539
–
5,065 225,604
20,964
11,655
–
–
258,223
–
2020
111,692
–
2,441
114,113
10,611
–
–
–
124,744
–
– The remuneration information provided in the table relates to the period from the date of appointment as ELT to 30 June, or from 1 July until the date of resignation,
unless otherwise stated.
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 31
G Service agreements
Remuneration and other terms of employment for the CEO and other Key Management Personnel are also formalised in
service agreements. Except for the CEO who has a six-month notice period, all contracts with members of the ELT may
be terminated early by either party with three months’ notice. The Company, at its full discretion, may make a payment
in lieu of the notice period, either partially or in full. Major provisions of the agreements relating to remuneration for
FY21 are set out below.
Doug McAlpine
Chief Executive Officer
(appointed 25 November 2019)
Chief Financial Officer
(appointed 1 July 2019 and
resigned 1 January 2020)
Company Secretary
(appointed 1 July 2019 and
resigned 10 November 2020)
Annual fixed remuneration
Performance cash bonus
Performance rights
$552,565 inclusive of superannuation and
non-monetary benefits.
The STI opportunity was forfeited.
No at-risk performance rights were granted.
Lynda Morris *
Chief Financial Officer
(appointed 1 January 2020)
Annual fixed remuneration
Performance cash bonus
Performance rights
$245,965 inclusive of superannuation and
non-monetary benefits.
The STI opportunity was forfeited.
No at-risk performance rights were granted.
Anand Adusumilli
Chief Data Scientist
Annual fixed remuneration
Performance cash bonus
Performance rights
$338,620 inclusive of superannuation and
non-monetary benefits.
The STI opportunity was forfeited.
No at-risk performance rights were granted.
Jonathon Idas
Chief Legal Officer
Company Secretary
(appointed 10 November 2020)
Annual fixed remuneration
Performance cash bonus
Performance rights
$350,400 inclusive of superannuation and
non-monetary benefits.
The STI opportunity was forfeited.
No at-risk performance rights were granted.
Denica Saunders
Chief Operating Officer
Annual fixed remuneration
Performance cash bonus
Performance rights
$355,465 inclusive of superannuation and
non-monetary.
The STI opportunity was forfeited.
No at-risk performance rights were granted.
Stephen Parrish
Chief People Officer
(appointed 1 January 2020,
resigned 14 May 2021)
Annual fixed remuneration
Performance cash bonus
Performance rights
$233,373 inclusive of superannuation and
non-monetary.
The STI opportunity was forfeited.
No at-risk performance rights were granted.
Nathan Johnston
Chief Technology Officer
(appointed 1 January 2020)
Annual fixed remuneration
Performance cash bonus
Performance rights
$245,965 inclusive of superannuation and
non-monetary benefits.
The STI opportunity was forfeited.
No at-risk performance rights were granted.
*
Lynda Morris Chief Financial Officer resigned 30 June 2021 and Peter Gunn was appointed 1 July 2021
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
32 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
H Share-based compensation
Performance rights
Performance rights have been granted to certain eligible employees under the Company’s Performance Rights Plan (PRP).
Performance rights granted under the PRP carry no dividend or voting rights. When exercisable, each performance right is
convertible into one ordinary share of Collection House Limited.
Details of performance rights over ordinary shares in the Group provided as remuneration to members of the ELT are set out
below.
NUMBER OF PERFORMANCE
RIGHTS GRANTED/ISSUED
DURING THE YEAR
NUMBER OF PERFORMANCE
RIGHTS VESTED/ISSUABLE
DURING THE YEAR
NAME
2021
2020
2021
2020
Doug McAlpine
–
–
–
–
Lynda Morris
–
–
–
–
Anand Adusumilli
–
26,194
–
–
Jonathon Idas
–
26,194
–
–
Denica Saunders
–
39,291
–
–
Stephen Parrish
(resigned 14 May 2021)
–
–
–
–
Nathan Johnston
–
–
–
–
The assessed fair value at grant date of performance rights compensation granted to members of the ELT has been
calculated using the five-day volume weighted average price (VWAP) of one ordinary share over the five days preceding
the grant. The expense is recognised over the vesting period. The expense for each relevant financial year will require an
assessment at each reporting date of the probability that each performance hurdle will be achieved.
No performance rights were issued related to FY21.
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 33
I Equity instruments held by key management personnel
Performance rights
There were no performance rights over ordinary share in the Company held by Directors or key management personnel
during the year ended 30 June 2021.
Share holdings
The number of shares in the Company held during the financial year by each Director of Collection House Limited and
other key management personnel of the Group, including their personally related parties, are set out below.
NON-EXECUTIVE DIRECTORS
CATEGORY
BALANCE AT
THE START OF THE YEAR
OTHER CHANGES
DURING THE YEAR
BALANCE AT
THE END OF THE YEAR
Leigh Berkley
Ordinary Shares
112,866
–
112,866
Michael Knox
Ordinary Shares
80,000
–
80,000
Sandra Birkensleigh
Ordinary Shares
–
–
–
Catherine McDowell
Ordinary Shares
–
–
–
EXECUTIVE DIRECTOR AND OTHER
KEY MANAGEMENT PERSONNEL
CATEGORY
BALANCE AT
THE START OF THE YEAR
OTHER CHANGES
DURING THE YEAR
BALANCE AT
THE END OF THE YEAR
Doug McAlpine
Ordinary Shares
8,547
–
8,547
Lynda Morris
Ordinary Shares
23,482
–
23,482
Anand Adusumilli
Ordinary Shares
–
–
–
Jonathon Idas
Ordinary Shares
–
–
–
Denica Saunders
Ordinary Shares
24,003
–
24,003
Stephen Parrish
Ordinary Shares
–
–
–
Nathan Johnston
Ordinary Shares
–
–
–
J Additional information
Loans to Directors and Executives
There were no loans to Directors or members of the ELT during the reporting period.
Shares under performance rights
LTIs are provided to certain eligible employees via the PRP. Total un-issued ordinary shares of the Group under
performance rights at the date of this report are detailed below.
PERFORMANCE
RIGHTS
DATE
RIGHTS EFFECTIVE
NUMBER OF RIGHTS
GRANTED/TO BE ISSUED
ISSUE PRICE
OF SHARES
NO. OF UNVESTED
SHARES AND VESTED
BUT NOT YET ISSUED
SHARES UNDER RIGHTS
EXPIRY DATE
PRP
1/7/19
398,068
Nil
Nil 30 September 2021
No FY20 or FY21 Performance rights were recommended.
End of Audited Remuneration Report
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
34 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
Indemnification and insurance of officers
During the financial year the Group paid premiums in respect of Directors’ and Officers’ liability and legal expenses and
insurance. This was for current and former Directors and Officers, including senior executives of the Group and Directors,
Senior Executives and Secretaries of its controlled entities.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought
against the Directors or Officers in their capacity as Directors or Officers of entities in the Group, and any other payments
arising from liabilities incurred by the Directors or Officers in connection with such proceedings. This does not include
such liabilities that arise from conduct involving a wilful breach of duty by the Directors or Officers or the improper use by
the Directors or Officers of their position or of information to gain advantage for themselves or someone else or to cause
detriment to the Group.
Proceedings on behalf of the company
On 15 March 2019, the Group was provided with a copy of a claim and statement of claim, which had been filed in the
Supreme Court of Queensland on the same date. The claim for damages is for $2,800,000 and proceedings are still being
defended by the Group.
No proceedings have been brought or intervened in on behalf of the Group with leave of the Court under section 237 of
the Corporations Act 2001.
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 35
Non-audit services
During the year KPMG, the Group’s auditor, has performed certain other services in addition to the audit and review of
financial statements.
The Board has considered the non-audit services provided during the year by the auditor, and the Audit and Risk
Management Committee is satisfied that the provision of those non-audit services during the year by the auditor is
compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the
following reasons:
• all non-audit services were subject to the corporate governance procedures adopted by the Group and have been
reviewed by the Audit and Risk Management Committee to ensure they do not impact the integrity and objectivity of the
auditor
• the non-audit services provided do not undermine the general principles relating to auditor independence as set out in
APES 110 Code of Ethics for Processional Accountants, as they did not involve reviewing or auditing the auditor’s own
work, acting in a management or decision-making capacity for the Group, acting as an advocate for the Group or jointly
sharing risks and rewards.
Details of the amounts paid and payable to Group’s auditor, KPMG, are set out below.
SERVICES OTHER THAN AUDIT AND REVIEW OF FINANCIAL STATEMENTS:
2021
$
Audit and review of financial statements
322,190
Other regulatory audit services
Trust account audits
88,150
Loan covenant compliance
3,300
Other services
Taxation compliance services
287,886
Total paid or payable to KPMG
701,526
Auditor’s independence declaration
A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out
on page 37.
FOR THE YEAR ENDED 30 JUNE 2021
Directors’ Report
36 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
Rounding of amounts
The Group is of a kind referred to in ASIC Corporations
(Rounding in Financial/Directors’ Report) Instrument
2016/191, issued by the Australian Securities and
Investments Commission, relating to the ‘rounding off’ of
amounts in the Directors’ report. Amounts in the Directors’
report have been rounded off in accordance with that
Corporations’ Instrument to the nearest thousand dollars,
or in certain cases, to the nearest dollar.
This report is made in accordance with a resolution
of Directors.
Collection House Limited
LEIGH BERKLEY
CHAIRMAN
Coffs Harbour
27 August 2021
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 37
24
©2021 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms
affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG
name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability
limited by a scheme approved under Professional Standards Legislation.
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of Collection House Limited
I declare that, to the best of my knowledge and belief, in relation to the audit of Collection House
Limited for the financial year ended 30 June 2021 there have been:
i.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
ii.
no contraventions of any applicable code of professional conduct in relation to the audit.
KPMG
Ben Flaherty
Partner
Brisbane
27 August 2021
KPM_INI_01
PAR_SIG_01
PAR_NAM_01
PAR_POS_01
PAR_DAT_01
PAR_CIT_01
FINANCIAL REPORT 2021
CONTENTS
Income statement
39
Statement of comprehensive income
40
Balance sheet
41
Statement of changes in equity
42
Statement of cash flows
43
Notes to the financial statements
44
Directors' declaration
94
Independent auditor's report to
the members
95
38 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
FOR THE YEAR ENDED 30 JUNE 2021
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 39
FOR THE YEAR ENDED 30 JUNE 2021
Income Statement
CONSOLIDATED
NOTES
2021
$’000
2020
$’000
Interest Income
18,887
79,261
Commission
55,244
63,938
Other revenue
5
1,196
8,448
Revenue from continuing operations
75,327
151,647
Direct collection costs
(14,321)
(22,739)
Employee expenses
6
(50,735)
(57,426)
Impairment – Purchase Debt Ledgers
10
–
(238,890)
Impairment – Property, plant and equipment
20
(2,612)
–
Depreciation and amortisation expense
6
(9,457)
(10,409)
Rental and Lease expenses
6
(458)
(983)
Restructuring expenses
(8,007)
(63)
Other expenses
(14,659)
(18,436)
Finance costs
6
(6,948)
(9,751)
Loss before income tax
(31,870)
(207,050)
Income tax (expense)/benefit
7
(120)
61,980
Loss from continuing operations
(31,990)
(145,070)
Loss for the year attributable to equity holders of
Collection House Limited
(31,990)
(145,070)
Loss per share for profit attributable to the equity holders
of the Company:
Basic loss per share (cents)
30
(22.5)
(103.2)
Diluted loss per share (cents)
30
(22.5)
(103.2)
The above income statement should be read in conjunction with the accompanying notes.
FOR THE YEAR ENDED 30 JUNE 2021
40 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
FOR THE YEAR ENDED 30 JUNE 2021
CONSOLIDATED
NOTES
2021
$’000
2020
$’000
Loss for the year
(31,990)
(145,070)
Other comprehensive income, net of income tax
Items that may be reclassified subsequently to profit or loss
Exchange differences on translation of foreign operations
(371)
–
Items that will not be reclassified to profit or loss
Fair Value adjustment – Equity instrument
12
(947)
(2,542)
Other comprehensive income for the year, net of income tax
(1,318)
(147,612)
Total comprehensive income for the year attributable to equity holders
of Collection House Limited
(33,308)
(147,612)
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
Statement of Comprehensive Income
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 41
CONSOLIDATED
NOTES
2021
$’000
2020
$’000
ASSETS
Current assets
Cash and cash equivalents
8
7,288
9,656
Receivables
9
10,134
13,311
Purchased debt ledgers
10
2,920
172,541
Current tax asset
12,487
5,383
Other assets
11
1,667
222
Total current assets
34,496
201,113
Non-current assets
Purchased debt ledgers
10
9,961
12,187
Equity investments
12
3,516
4,868
Property, plant and equipment
13
17,580
28,297
Intangible assets
14
28,091
33,011
Deferred tax assets
19
51,889
63,732
Receivables
9
546
740
Total non-current assets
111,583
142,835
Total assets
146,079
343,948
LIABILITIES
Current liabilities
Payables
15
9,059
13,212
Borrowings
18
11,733
214,857
Provisions
16
4,373
4,419
Other financial liabilities
17
7,379
7,525
Total current liabilities
32,544
240,013
Non-current liabilities
Borrowings
18
49,419
–
Provisions
16
195
142
Other financial liabilities
17
24,110
30,674
Total non-current liabilities
73,724
30,816
Total liabilities
106,268
270,829
Net assets
39,811
73,119
EQUITY
Contributed equity
21
119,689
119,567
Reserves
22
(5,619)
(4,179)
Retained profits/(losses)
(74,259)
(42,269)
Total equity
39,811
73,119
The above balance sheet should be read in conjunction with the accompanying notes.
Balance Sheet
AS AT 30 JUNE 2021
FOR THE YEAR ENDED 30 JUNE 2021
42 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
ATTRIBUTABLE TO OWNERS OF
COLLECTION HOUSE LIMITED
CONSOLIDATED
NOTES
CONTRIBUTED
EQUITY
$’000
RESERVES
$’000
RETAINED
EARNINGS
$’000
TOTAL
EQUITY
$’000
Balance at 1 July 2019
116,413
365
108,565
225,343
Loss for the year
–
–
(145,070)
(145,070)
Other comprehensive income
–
(2,542)
–
(2,542)
Total comprehensive income
for the year
–
(2,542)
(145,070)
(147,612)
Transactions with owners in their
capacity as owners:
Contributions of equity net of
transaction costs
21
1,571
–
–
1,571
Share issuance of treasury shares
197
–
–
197
Withdrawal of treasury shares
167
(167)
–
–
Acquisition of deferred shares
(315)
–
–
(315)
Employee Share Plan – FY20
(197)
197
–
–
Release of deferred shares
315
(315)
–
–
Release of Performance Rights Plan
1,416
(1,416)
–
Employee share rights – value of
employee services
–
(301)
–
(301)
Dividends provided for or paid
23
–
–
(5,764)
(5,764)
3,154
(2,002)
(5,764)
(4,612)
Balance at 30 June 2020
119,567
(4,179)
(42,269)
73,119
Balance at 1 July 2020
119,567
(4,179)
(42,269)
73,119
Loss for the year
–
–
(31,990)
(31,990)
Other comprehensive income
–
(1,318)
–
(1,318)
Total comprehensive income
for the year
–
(1,318)
(31,990)
(33,308)
Transactions with owners in their
capacity as owners:
Withdrawal of treasury shares
122
(122)
–
–
122
(122)
–
–
Balance at 30 June 2021
119,689
(5,619)
(74,259)
39,811
The above statement of changes in equity should be read in conjunction with the accompanying notes.
Statement of Changes in Equity
FOR THE YEAR ENDED 30 JUNE 2021
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 43
CONSOLIDATED
NOTES
2021
$’000
2020
$’000
Cash flows from operating activities
Receipts from customers and debtors (inclusive of GST)
110,024
182,660
Payments to suppliers and employees (inclusive of GST)
(101,076)
(107,606)
Income taxes refunded/(paid)
5,023
(9,705)
Net cash inflow from operating activities
32(a)
13,971
65,349
Cash flows from investing activities
Payments for property, plant and equipment
(335)
(950)
Payments for purchased debt ledgers
(6,956)
(40,049)
Receipts from sale of purchase debt ledgers
158,355
–
Receipts from sale of investment
–
492
Receipts from sale of subsidiary
10
–
Payments for intangible assets
(889)
(2,032)
Net cash inflow/(outflow) from investing activities
150,185
(42,539)
Cash flows from financing activities
Proceeds from borrowings
16,959
16,546
Repayment of borrowings
(172,165)
(12,292)
Payment of lease liabilities
(6,251)
(5,707)
Borrowing costs
(581)
(1,351)
Interest paid
(4,223)
(7,559)
Dividends paid to Company’s shareholders
23
–
(5,764)
Proceeds from issues of shares and other equity securities
–
1,253
Net cash outflow from financing activities
(166,261)
(14,874)
Net (decrease)/increase in cash and cash equivalents
(2,105)
7,936
Cash and cash equivalents at the beginning of the financial year
9,656
1,596
Effects of exchange rate changes on cash and cash equivalents
(263)
124
Cash and cash equivalents at end of the year
8
7,288
9,656
Cash at bank and on hand
7,288
9,656
Cash and cash equivalent at end of year
7,288
9,656
The above statement of cash flows should be read in conjunction with the accompanying notes.
Statement of Cash Flows
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
44 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
1. Summary of significant
accounting policies
The principal accounting policies adopted in
the preparation of these consolidated financial
statements are set out below. These policies have
been consistently applied to all the years presented,
unless otherwise stated.
(a) Basis of preparation
These financial statements are for the consolidated entity
consisting of Collection House Limited (the Company) and
its subsidiaries (the Group). Collection House Limited is a
public company incorporated and domiciled in Australia.
The financial statements were authorised for issue on
27 August 2021 by the Directors of the Company.
These general purpose financial statements have been
prepared in accordance with Australian Accounting
Standards and interpretations issued by the Australian
Accounting Standards Board and the Corporations Act
2001. Collection House Limited is a for profit entity for the
purpose of preparing the financial statements.
(I)
COMPLIANCE WITH IFRS
The consolidated financial statements of the Collection
House Limited Group also comply with International
Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB).
(II) NEW STANDARDS AND INTERPRETATIONS NOT
YET ADOPTED
In April 2021, the International Financial Reporting
Standards Interpretations Committee (IFRIC) issued a final
agenda decision, Configuration or customisation costs in
a cloud computing arrangement. The decision discusses
whether configuration or customisation expenditure
relating to cloud computing arrangements is able to be
recognised as an intangible asset and if not, over what
time period the expenditure is expensed.
The Group’s accounting policy has historically been
to capitalise all costs related to cloud computing
arrangements as intangible assets in the balance sheet.
The adoption of this agenda decision could result in
a reclassification of these intangible assets to either a
prepaid asset in the balance sheet and/or recognition as
an expense in the income statement, impacting both the
current and/or prior periods presented.
As at 30 June 2021 the Group has not adopted this
IFRIC agenda decision. The impact of the change
is not reasonably estimable as the Group has yet to
commence its assessment of the impact of the IFRIC
agenda decision. The Group expects to adopt this IFRIC
agenda decision in its half-year financial statements
ending on 31 December 2021.
(III) HISTORICAL COST CONVENTION
These financial statements have been prepared under the
historical cost convention, as modified by the revaluation
of financial assets, financial assets and liabilities (including
derivative instruments) at fair value through profit or loss,
and certain classes of property, plant and equipment.
(IV) CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements requires the use
of certain critical accounting estimates. It also requires
management to exercise its judgement in the process
of applying the Group’s accounting policies. The areas
involving a higher degree of judgement or complexity,
or areas where assumptions and estimates are significant
to the financial statements are disclosed in Note 2.
(V) GOING CONCERN
The financial statements have been prepared on a
going concern basis as the Directors believe the Group
will be able to pay its debts as and when they fall due
and payable.
The Directors note that the recapitalisation process
was completed on 23 December 2020, the PDL sales
proceeds have been applied to repayment of debt,
ongoing loan facilities have been agreed with the lenders
and Credit Corp Group.
Now that the recapitalisation process has reached an
outcome, the Group’s ability to continue as a going
concern is critically dependent on implementing its
strategic plan and meeting its targets. The Directors
believe that the Group will be able to continue as a going
concern based on cash flow forecasts which indicate the
Group is able to pay its debts as and when they fall due
under a range of risk adjusted scenarios. Key assumptions
used in these cash flow forecasts and the assessment of
the Group’s ability to continue as a going concern include:
• enhancing the commission collections side of the
Group’s business and retention of key clients.
• managing costs to a sustainable level. close
management of its financial position and performance
to ensure compliance with relevant financial covenants
imposed by its lenders under the terms of its on-going
funding facility.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 45
1. Summary of significant
accounting policies (cont)
(a) Basis of preparation (cont)
• the performance of the PDL assets retained by the
Group remaining in line with the G roup’s expectation
of future expected cash collections.
• managing any ongoing impact from economic
uncertainty as a result of COVID-19; and
• the progressive build-up of its PDL Asset book.
While the Directors are encouraged that the performance
of the Group’s continuing operations is improving from
experience during FY21, the improving but still existing
macro-economic challenges and uncertainties from
COVID-19 may impact on the Group’s ability to execute its
strategic plan and achieve the key assumptions outlined
above. As a result, these conditions give rise to a material
uncertainty that may cast significant doubt over the
Group’s ability to continue as a going concern and be
able to realise its assets and extinguish its liabilities in the
normal course of business at the stated amounts in the
financial statements.
(b) Principles of consolidation
(I)
SUBSIDIARIES
Subsidiaries are all entities over which the Group has
control. The Group controls an entity when the Group
is exposed to, or has rights to, variable returns from its
involvement with the entity and has the ability to affect
those returns through its power to direct the activities
of the entity.
Subsidiaries are fully consolidated from the date on
which control is transferred to the Group. They are
deconsolidated from the date that control ceases.
The acquisition method of accounting is used to account
for business combinations by the Group (refer to Note 1(h)).
Intercompany transactions, balances, and unrealised
gains on transactions between Group companies are
eliminated. Unrealised losses are also eliminated unless
the transaction provides evidence of the impairment of the
asset transferred. Accounting policies of subsidiaries have
been changed where necessary to ensure consistency
with the policies adopted by the Group.
There are currently no non-controlling interests in
the Group.
(c) Segment reporting
Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating
decision maker. The chief operating decision maker, who
is responsible for allocating resources and assessing
performance of the operating segments, has been
identified as the Chief Executive Officer.
(d) Foreign currency translation
(I)
FUNCTIONAL AND PRESENTATION CURRENCY
Items included in the financial statements of each
of the Group’s entities are measured using the currency
of the primary economic environment in which it
operates (‘the functional currency’). The consolidated
financial statements are presented in Australian
dollars, which is Collection House Limited’s functional
and presentation currency.
(II) TRANSACTIONS AND BALANCES
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and
losses resulting from the settlement of such transactions
and from the translation at year end exchange rates of
monetary assets and liabilities denominated in foreign
currencies are recognised in profit or loss, except when
they are deferred in equity as qualifying cash flow hedges
and qualifying net investment hedges or are attributable to
part of the net investment in a foreign operation.
Non-monetary items that are measured at fair value in
a foreign currency are translated using the exchange
rates at the date when the fair value was determined.
Translation differences on assets and liabilities carried at
fair value are reported as part of the fair value gain or loss.
(III) GROUP COMPANIES
The results and financial position of foreign operations that
have a functional currency different from the presentation
currency are translated into the presentation currency
as follows:
• assets and liabilities for each balance sheet presented
are translated at the closing rate at the date of that
balance sheet;
• income and expenses for each income statement and
statement of comprehensive income are translated at
average exchange rates (unless this is not a reasonable
approximation of the cumulative effect of the rates
prevailing on the transaction dates, in which case
income and expenses are translated at the dates of the
transactions); and
• all resulting exchange differences are recognised in
other comprehensive income.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
46 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
1. Summary of significant
accounting policies (cont)
(d) Foreign currency translation (cont)
On consolidation, exchange differences arising from
the translation of any net investment in foreign entities,
and of borrowings and other financial instruments
designated as hedges of such investments, are
recognised in other comprehensive income. When a
foreign operation is sold or any borrowings forming
part of the net investment are repaid, the associated
exchange differences are reclassified to profit or loss,
as part of the gain or loss on sale.
Goodwill and fair value adjustments arising on the
acquisition of a foreign operation are treated as assets
and liabilities of the foreign operation and translated at
the closing rate.
(e) Revenue recognition
Revenue is recognised based on the consideration
specified in the contract at the time when control over the
good or service is transferred to the customer i.e. when
performance obligations are satisfied.
Revenue is recognised for the major business activities
as follows:
(I)
INTEREST INCOME – PURCHASED DEBT LEDGERS
(PDL’S)
Interest income is recognised using the application of
the credit-adjusted effective interest rate (“EIR”) to the
amortised cost of the PDLs under AASB 9 Financial
Instruments. Interest is shown net of any adjustments to
the carrying amount of PDLs as a result of changes in
estimated cash flows. The EIR is the rate that discounts
estimated future cash receipts of the PDLs to the net
carrying amount (i.e. the price paid to acquire the asset).
(II) CALL OPTION INCOME – REFLECTS THE REVENUE
THE COMPANY EARNS BY SELLING THE RIGHT TO
PURCHASE FUTURE COLLECTIONS OF AN ELIGIBLE
PORTFOLIO OF PDLS TO A THIRD PARTY.
Revenue is recognised for accounting purposes when a
call option contract is signed, as from the date the third
party receives a substantial portion of the cash flows
and the Group has no future rights or entitlement to the
collections on that portfolio.
(III) RENDERING OF SERVICES – COMMISSION REVENUE
Revenue from rendering services is recognised based on
the below conditions:
CATEGORY
NATURE AND TIMING OF SATISFACTION OF
PERFORMANCE OBLIGATION
REVENUE RECOGNITION
Rendering of services:
Commission Revenue
The Group receives commissions for the provision
of debt collection services. Commission structures
are based on contract terms and include:
• Percentage based on the value of collections;
• Fees for collection activities;
• Fees for full time equivalents (FTE); and
• Fees for other collection related services.
The Group is also entitled to receive performance
incentives, bonuses, and rebates for various
contracts.
Where activities are performed by third parties, and
are on-charged to the customer at cost or with a
margin, the Group recognises revenue for these
services as the Principal.
Income is recognised over time with
the relevant measure of progress
being the collections output at the
end of each period.
Re-estimation of variable
consideration is completed at each
reporting date.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 47
1. Summary of significant
accounting policies (cont)
(e) Revenue recognition (cont)
(IV) SALE OF NON-CURRENT ASSETS
The net gain or loss on disposal of non-current assets
is included as either income or an expense at the date
control of the asset passes to the buyer, usually when an
unconditional contract of sale is signed.
The gain or loss on disposal is calculated as the difference
between the carrying amount of the asset at the time of
disposal and the net proceeds on disposal.
Sale of PDL assets is considered to be infrequent, thus
classified as other revenue. The Group’s business model
for PDL assets is to receive the contractual cash flows
and not to sell.
(V) DIVIDENDS
Revenue from dividends and distributions from controlled
entities is recognised by the Parent Entity when they are
declared by the controlled entities.
(f) Income tax
The income tax expense or benefit for the period is
the tax payable on the current period’s taxable income
based on the applicable income tax rate for each
jurisdiction adjusted by changes in deferred tax assets
and liabilities attributable to temporary differences and
to unused tax losses.
The current income tax loss is calculated on the basis
of the tax laws enacted or substantively enacted at the
end of the reporting period in the countries where the
Company’s subsidiaries and associates operate and
generate taxable income. Management periodically
evaluates positions taken in tax returns with respect to
situations in which applicable tax regulation is subject
to interpretation. It establishes provisions where
appropriate on the basis of amounts expected to be
paid to the tax authorities.
Deferred income tax is provided in full, using the liability
method, on temporary differences arising between the tax
bases of assets and liabilities and their carrying amounts
in the consolidated financial statements. However,
deferred tax liabilities are not recognised if they arise from
the initial recognition of goodwill. Deferred income tax is
also not accounted for if it arises from initial recognition of
an asset or liability in a transaction other than a business
combination that at the time of the transaction affects
neither accounting nor taxable profit or loss. Deferred
income tax is determined using tax rates (and laws) that
have been enacted or substantially enacted by the end
of the reporting period and are expected to apply when
the related deferred income tax asset is realised or the
deferred income tax liability is settled.
Deferred tax assets are recognised for deductible
temporary differences and unused tax losses only if it is
probable that future taxable amounts will be available to
utilise those temporary differences and losses.
Deferred tax liabilities and assets are not recognised for
temporary differences between the carrying amount and
tax bases of investments in foreign operations where
the company is able to control the timing of the reversal
of the temporary differences and it is probable that the
differences will not reverse in the foreseeable future.
Deferred tax assets and liabilities are offset when there
is a legally enforceable right to offset current tax assets
and liabilities and when the deferred tax balances relate
to the same taxation authority. Current tax assets and
tax liabilities are offset where the entity has a legally
enforceable right to offset and intends either to settle
on a net basis, or to realise the asset and settle the
liability simultaneously.
Collection House Limited and its wholly owned
Australian controlled entities have implemented the
tax consolidation legislation. As a consequence, these
entities are taxed as a single entity and the deferred tax
assets and liabilities of these entities are set off in the
consolidated financial statements.
Current and deferred tax is recognised in profit or loss,
except to the extent that it relates to items recognised in
other comprehensive income or directly in equity. In this
case, the tax is also recognised in other comprehensive
income or directly in equity, respectively.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
48 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
1. Summary of significant
accounting policies (cont)
(g) Leases
(I)
AS A LESSEE
The Group leases many assets, including properties,
vehicles and IT equipment. As a lessee, the Group
previously classified leases as operating or finance leases
based on its assessment of whether the lease transferred
substantially all of the risks and rewards of the ownership.
Under AASB 16, the Group recognises right-of-use assets
and lease liabilities for most leases i.e. these leases are
on-balance sheet. The Group has elected not to recognise
right-of-use assets and lease liabilities for some short-term
leases and leases for which the underlying asset is a low
value (e.g. IT equipment). The Group recognises the lease
payments associated with these leases as an expense on
a straight-line basis over the lease.
The Group recognises a right-of-use asset and a lease
liability at the lease commencement date.
The right-of-use asset is initially measured at cost,
which comprises the initial amount of the lease liability
adjusted for any lease payments made at or before
commencement date, plus any initial direct costs incurred
and an estimate of costs to dismantle and remove the
underlying asset or to restore the underlying asset or
the site on which it is located, less any lease incentives
received. The right-of-use asset is subsequently measured
at cost less any accumulated depreciation and impairment
losses, and adjusted for certain remeasurements of the
lease liability.
The lease liability is initially measured at the present
value of the lease payments that are not paid at the
commencement date, discounted using the interest
rate implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate as
the discount rate.
The lease liability is subsequently measured at amortised
cost using the effective interest method i.e. increased by
the interest cost on the lease liability and decreased by
lease payment made. It is remeasured when there is a
change in future lease payments arising from a change in
an index or rate, a change in the estimate of the amount
expected to be payable under a residual value guarantee,
or as appropriate, changes in the assessment of whether
a purchase or extension option is reasonably certain to be
exercised or a termination option is reasonably certain not
to be exercised.
The Group has applied judgement to determine the
lease term for some lease contracts in which it is a
lessee that include renewal options. The assessment
of whether the Group is reasonably certain to exercise
such option impacts the lease term, which significantly
affects the amount of lease liabilities and right-of-use
assets recognised.
(II) AS A LESSOR
When the Group acts as a lessor, it determines at
lease inception whether each lease is a finance or
operating lease.
The Group sub-leases some of its premises. When the
Group is an intermediate lessor, it accounts for its interests
in the head lease and the sub-lease separately. It classifies
the sub-lease as a finance lease or as an operating lease
with reference to the right-of-use asset arising from the
head lease, not with reference to the underlying assets.
(h) Business combinations
The acquisition method of accounting is used to account
for all business combinations, regardless of whether
equity instruments or other assets are acquired. The
consideration transferred for the acquisition of a subsidiary
comprises the fair values of the assets transferred, the
liabilities incurred, and the equity interests issued by the
Group. The consideration transferred also includes the fair
value of any asset or liability resulting from a contingent
consideration arrangement and the fair value of any
pre-existing equity interest in the subsidiary. Acquisition
related costs are expensed as incurred. Identifiable assets
acquired and liabilities and contingent liabilities assumed
in a business combination are measured initially at their
fair values at the acquisition date.
The excess of the consideration transferred over the fair
value of the Group’s share of the net identifiable assets
acquired is recorded as goodwill. If this amount is less
than the fair value of the net identifiable assets of the
subsidiary acquired and the measurement of all amounts
has been reviewed, the difference is recognised directly
in profit or loss as a bargain purchase.
Where settlement of any part of cash consideration
is deferred, the amounts payable in the future are
discounted to their present value as at the date of
exchange. The discount rate used is the entity’s
incremental borrowing rate, being the rate at which a
similar borrowing could be obtained from an independent
financier under comparable terms and conditions.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 49
1. Summary of significant
accounting policies (cont)
(h) Business combinations (cont)
The recent amendment in AASB 3 Business Combinations
enables the acquirer to apply a concentration test, which
evaluates whether the majority of the fair value of assets
acquired is concentrated into a single identifiable asset
or group of assets. If this test is satisfied, the acquirer can
elect to treat the entire transaction as an asset acquisition
and avoid the accounting and disclosure obligations
applicable to a business acquisition.
(i) Impairment of assets
Goodwill is not subject to amortisation and is tested
annually for impairment, or more frequently if events
or changes in circumstances indicate that it might be
impaired. Other assets are reviewed for impairment
whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An
impairment loss is recognised for the amount by which
the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an
asset’s fair value less costs to sell and value-in-use. For
the purposes of assessing impairment, assets are grouped
at the lowest levels for which there are separately
identifiable cash inflows which are largely independent
of the cash inflows from other assets or groups of assets
(cash generating units).
(j) Cash and cash equivalents
For the purpose of presentation in the cash flow
statement, cash and cash equivalents includes cash
on hand, deposits held at call with financial institutions,
other short term, highly liquid investments with original
maturities of three months or less that are readily
convertible to known amounts of cash and which are
subject to an insignificant risk of changes in value, and
where applicable bank overdrafts. Where applicable, bank
overdrafts are shown within borrowings in current liabilities
in the consolidated balance sheet.
(k) Trade receivables
Trade receivables are recognised initially at fair value and
subsequently carried at amortised cost using the effective
interest method, less any impairment.
Recognition and derecognition
Regular way purchases and sales of financial assets are
recognised on trade date i.e. the date on which the Group
commits to purchase or sell the asset. Financial assets are
derecognised when the rights to receive cash flows from
the financial assets have expired or have been transferred
and the Group has transferred substantially all the risks
and rewards of ownership.
Impairment
Expected losses for trade receivables are
measured as life-time expected credit losses using
the simplified method.
(l) Other financial assets
Classification
The Group classifies financial assets as subsequently
measured at either amortised cost or fair value on the
basis of both the Group’s business model for managing
the financial assets and the contractual cash flow
characteristics of the financial asset.
The classification depends on the purpose for which the
financial assets were acquired. Management determines
the classification of its financial assets at initial recognition
and re-evaluates this designation at each reporting date.
(I)
FINANCIAL ASSETS SUBSEQUENTLY MEASURED AT
AMORTISED COST – PDLS
Classification
PDLs have been included in this category of financial
assets as the Group’s business model for managing
the PDLs and the characteristics of the contractual
cash flows of the financial asset are consistent with this
measurement approach.
PDLs are included as non-current assets, except for the
amount of the ledger that is expected to be realised within
12 months of the balance sheet date, which is classified as
a current asset.
Measurement
PDLs are initially recognised at cost, as cost reflects
fair value plus any incidental costs of acquisition and
thereafter measured at amortised cost using the
credit-adjusted effective interest method, less any
impairment losses.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
50 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
1. Summary of significant
accounting policies (cont)
(l) Other financial assets (cont)
Impairment
The carrying amount of the PDLs is continuously reviewed
to ensure that the carrying amount is not impaired. Due to
the characteristics of the Group’s investment in PDLs, they
are considered as purchased or originated credit impaired
(“POCI”) assets under AASB 9. Where the carrying
amount exceeds the present value of the estimated future
cash flows discounted at the asset’s Credit Adjusted
Effective Interest Rate (“CAEIR”), the Group recognises an
impairment loss. Favourable changes in lifetime expected
credit losses are recognised as an impairment gain,
even if the favourable change is more than the amount
previously recognised in profit or loss.
PDL is made up of different segments based on detailed
customer level experience (historical performance),
customer status, type of debt, payment arrangements and
timing of cash flows received from customers. Different
assumptions are applied based on the type of segment,
resulting in different liquidation curves based on the type
of debt, which will impact the overall PDL asset valuation.
Once the total estimated future cash flows are determined
based on the Group’s strategy and macro-economic
factors such as the COVID-19 impacts, the asset’s Credit
adjusted Effective Interest Rate (“CAEIR”) will be applied
to determine the present value at reporting date. In
addition, an overlay will be applied to form the reflection
of short to medium term economic impacts i.e. COVID-19
uncertainties, market volatility, unemployment, customer/
Vendor market issues and any other risk factors based on
the nature of the segment within the PDL asset.
(II) EQUITY INVESTMENTS
At the initial recognition, the Group will measure a financial
asset at fair value with the transaction costs that are
directly attributable to the acquisition. The Group will
make the designation whether the investments meet
fair value through other comprehensive income (FVOCI)
criteria based on the strategic purpose to hold the equity
investment for long term rather than short term trading.
After subsequent recognition, any gains or losses on
these instruments are recognised in other comprehensive
income and not the profit and loss.
(m) Fair value estimation of financial
assets and liabilities
The fair value of financial assets and financial liabilities
must be estimated for recognition and measurement or for
disclosure purposes.
The fair value of financial instruments that are not traded in
an active market is determined using valuation techniques.
The Group uses estimated discounted cash flows to
determine fair value.
The Group measures fair values using the following
fair value hierarchy and valuation techniques, which
reflect the significance of the inputs used in making the
measurements:
• Level 1: This category includes assets and liabilities for
which the valuation is determined from inputs based on
un-adjusted quoted market prices in active markets for
identical instruments;
• Level 2: This category includes assets and liabilities
for which the valuation is determined from inputs other
than quoted prices included within level 1, which are
observable either directly or indirectly. This includes
the use of discounted cash flow analysis, option pricing
models and other market accepted valuation models;
and
• Level 3: This category includes assets and liabilities
for which the valuation includes inputs that are not
based on observable market data. This includes equity
instruments where there are no quoted market prices.
The fair value hierarchy classification of instruments:
• Purchased Debt Ledgers (PDL) – Level 2
• Borrowings – Level 2
• Equity instrument – Level 3
There is no movement between levels as compared to
prior financial year.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 51
1. Summary of significant
accounting policies (cont)
(n) Property, plant and equipment
All items of property, plant and equipment are initially
recorded at cost at the date of acquisition, being the fair
value of the consideration provided plus incidental costs
directly attributable to the acquisition. Subsequent costs
are included in the assets carrying amount, or recognised
as a separate asset as appropriate, only when it is
probable that future economic benefits associated with
the item will flow to the Group, and the cost of the item
can be measured reliably.
Where settlement of any part of cash consideration
is deferred, the amounts payable are recorded at
their present value, discounted at the rate applicable
to the Company if similar borrowings were obtained
from an independent financier under comparable terms
and conditions.
The costs of assets constructed or internally generated
by the Group, other than goodwill, include the cost of
materials and direct labour. Directly attributable overheads
and other incidental costs are also capitalised to the asset.
Borrowing costs are capitalised to qualifying assets as set
out in Note 1(r).
Expenditure, including that on internally generated
assets, is only recognised as an asset when the Group
controls future economic benefits as a result of the costs
incurred, it is probable that those future economic benefits
will eventuate, and the costs can be measured reliably.
Costs attributable to feasibility and alternative approach
assessments are expensed as incurred.
All assets are depreciated using the straight-line
method over their estimated useful lives taking into
account estimated residual values, with the exception
of leased assets, which are depreciated over the shorter
of the lease term and their useful lives.
Assets are depreciated or amortised from the date
of acquisition or, in respect of internally constructed
assets, from the time an asset is completed and
held ready for use.
The estimated useful lives of property, plant and
equipment for current and comparative periods
are as follows:
• Plant and equipment
4-12 years
• Computer equipment
3-5 years
• Leased plant and equipment
Term of Lease
The assets’ residual values and useful lives are reviewed,
and adjusted if appropriate, at the end of each reporting
period. When changes are made, adjustments are
reflected prospectively in current and future periods only.
An asset’s carrying amount is written down immediately
to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount (Note 1(i)).
Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These are
included in profit or loss.
(o) Intangible assets
(I)
GOODWILL
Goodwill is measured as described in Note 1(h). Goodwill
on acquisitions of subsidiaries is included in intangible
assets. Goodwill is not amortised but it is tested for
impairment annually, or more frequently if events or
changes in circumstances indicate that it might be
impaired, and is carried at cost less accumulated
impairment losses. Gains and losses on the disposal
of an entity include the carrying amount of goodwill
relating to the entity sold.
Goodwill is allocated to cash generating units for the
purpose of impairment testing. The allocation is made
to those cash generating units or groups of cash
generating units that are expected to benefit from
the business combination in which the goodwill arose,
identified according to operating segments (Note 4).
(II) IT DEVELOPMENT AND SOFTWARE
Costs incurred in developing products or systems and
costs incurred in acquiring software and licenses that
will contribute to future period financial benefits through
revenue generation and/or cost reduction are capitalised
to software and systems. Costs capitalised include
external direct costs of materials and service and direct
payroll and payroll related costs of employees’ time spent
on the project. Amortisation commences from the point
at which the asset is ready for use and is calculated on
a straight-line basis over periods generally ranging from
2 to 10 years. Useful lives are reviewed at each reporting
date and adjusted if appropriate.
IT development costs include only those costs
directly attributable to the development phase and
are only recognised following completion of technical
feasibility and where the Group has an intention and
ability to use the asset.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
52 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
1. Summary of significant
accounting policies (cont)
(o) Intangible assets (cont)
(III) CUSTOMER CONTRACTS
The customer contracts were acquired as part of a
business combination. They are recognised at their fair
value at the date of acquisition and are subsequently
amortised on a straight-line basis over periods ranging
from 2 to 10 years.
(IV) OTHER INTANGIBLE ASSETS
Licences and intellectual property are considered to
have a definite useful life and are carried at cost less
accumulated amortisation. All costs associated with
the maintenance and protection of these assets are
expensed in the period consumed.
(p) Trade and other payables
These amounts represent liabilities for goods and
services provided to the Group prior to the end of
financial year which are unpaid. The amounts are
unsecured and are usually paid within 30 days of
recognition. Trade and other payables are presented
as current liabilities unless payment is not due within
12 months from the reporting date.
(q) Borrowings
All borrowings are recognised at their principal amounts
subject to set off arrangements which represent the
present value of future cash flows associated with
servicing the debt. Where interest is payable in arrears
the interest expense is accrued over the period it
becomes due and it is recorded at the contracted rate
as part of “Other payables”.
Where interest is paid in advance, the interest expense is
recorded as a part of “Prepayments” and released over
the period to maturity.
Borrowings are removed from the consolidated balance
sheet when the obligation specified in the contract
is discharged, cancelled, or expired. The difference
between the carrying amount of a financial liability that
has been extinguished or transferred to another party
and the consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in profit or
loss as other income or finance costs.
Borrowings are classified as current liabilities unless the
Group has an unconditional right to defer settlement of the
liability for at least 12 months after the reporting period.
(r) Borrowing costs
Borrowing costs incurred for the construction of any
qualifying asset are capitalised during the period of
time that is required to complete and prepare the asset
for its intended use or sale. Other borrowing costs are
expensed.
Borrowing costs include interest, amortisation of discounts
or premiums relating to borrowings, amortisation of
ancillary costs incurred in connection with arrangement of
borrowings, foreign exchange losses net of any hedged
amounts on borrowings, including trade creditors and
lease finance charges.
Ancillary costs incurred in connection with the
arrangement of borrowings are capitalised and amortised
over the life of the borrowings.
(s) Provisions
(I)
MAKE GOOD
The Group is required to restore the leased premises
for a number of its premises to their original condition at
the end of the respective lease terms. A provision has
been recognised for the estimated expenditure required
to remove any leasehold improvements. These costs
have been capitalised as part of the cost of leasehold
improvements and are amortised over the shorter of the
term of the lease or the useful life of the assets.
(II) LEGAL PROVISIONS
Provisions for legal claims are recognised when the Group
has a present legal or constructive obligation as a result of
past events, it is probable that an outflow of resources will
be required to settle the obligation and the amount has
been reliably estimated. Provisions are not recognised for
future operating losses.
Where there are a number of similar obligations, the
likelihood that an outflow will be required in settlement is
determined by considering the class of obligations as a
whole. A provision is recognised even if the likelihood of
an outflow with respect to any one item included in the
same class of obligations may be small.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 53
1. Summary of significant
accounting policies (cont)
(s) Provisions (cont)
(III) RECOGNITION AND MEASUREMENT
Provisions are measured at the present value of
management’s best estimate of the expenditure required
to settle the present obligation at the end of each
reporting period. The discount rate used to determine the
present value is a pre-tax rate that reflects current market
assessments of the time value of money and the risks
specific to the liability. The increase in the provision due to
the passage of time is recognised as interest expense.
(t) Employee benefits
(I)
SHORT TERM OBLIGATIONS
Liabilities for wages and salaries, including non-monetary
benefits and annual leave expected to be settled within 12
months after the end of the period in which the employees
render the related service are recognised in respect of
employees’ services up to the end of the reporting period
and are measured at the amounts expected to be paid
when the liabilities are settled. The liability for annual
leave is recognised in the provision for employee benefits.
All other short term employee benefit obligations are
presented as payables.
(II) LONG TERM EMPLOYEE BENEFIT OBLIGATIONS
The liability for long service leave and annual leave
which is not expected to be settled within 12 months after
the end of the period in which the employees render
the related service is recognised in the provision for
employee benefits and measured as the present value
of expected future payments to be made in respect of
services provided by employees up to the end of the
reporting period. Consideration is given to expected
future wage and salary levels, experience of employee
departures and periods of service. Expected future
payments are discounted using market yields at the end of
the reporting period on national government bonds with
terms to maturity and currency that match, as closely as
possible, the estimated future cash outflows.
The obligations are presented as current liabilities in the
consolidated balance sheet if the entity does not have an
unconditional right to defer settlement for at least twelve
months after the reporting date, regardless of when the
actual settlement is expected to occur.
(III) SUPERANNUATION PLANS
The Company and other controlled entities make
statutory contributions to several superannuation
funds in accordance with the directions of its
employees. Contributions are expensed in the
period to which they relate.
(IV) SHARE BASED PAYMENTS
Share based compensation benefits are provided via
the Collection House Limited Performance Rights Plan.
Further details are set out in Note 31.
The fair value of the performance rights granted under
the PRP was independently determined. The fair value
at grant date has been calculated using the five-day
volume weighted average price (VWAP). The expense
is recognised over the vesting period. The expense for
each relevant financial year will require an assessment
at each reporting date of the probability that each
performance hurdle will be achieved. This probability
factor will then be multiplied by the total number of rights
apportioned to each performance hurdle to determine
the number used in calculating the charge to profit and
loss. Further details are set out in Note 31.
(V) TERMINATION BENEFITS
Termination benefits are payable when employment is
terminated before the normal retirement date, or when an
employee accepts voluntary redundancy in exchange for
these benefits. The Group recognises termination benefits
when it is demonstrably committed to either terminating
the employment of current employees according to a
detailed formal plan without possibility of withdrawal or to
providing termination benefits as a result of an offer made
to encourage voluntary redundancy. Benefits falling due
more than 12 months after the end of the reporting period
are discounted to present value.
(u) Government grants – Grants related
to income
Government grants are recognised when there is
reasonable assurance that the entity will comply with
the conditions attaching to them and the grants will
be received. The Group has received the JobKeeper
payments to provide some relief from the COVID-19
effects. The JobKeeper grant is related to income, thus
the payments are presented as part of profit or loss,
which are deducted in reporting the related expense i.e.
employment costs. Further details are set out in Note 6.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
54 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
1. Summary of significant
accounting policies (cont)
(v) Contributed equity
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new
shares are shown in equity as a deduction, net of tax, from
the proceeds.
Where any Group entity purchases the Company’s equity
instruments, for example as the result of a share buyback
or a share-based payment plan, the consideration paid,
including any directly attributable incremental costs (net
of income taxes) is deducted from equity attributable to
the equity holders of Collection House Limited as treasury
shares until the shares are cancelled or reissued. Where
such ordinary shares are subsequently reissued, any
consideration received, net of any directly attributable
incremental transaction costs and the related income
tax effects, is included in equity attributable to the equity
holders of Collection House Limited.
(w) Dividends
Provision is made for the amount of any dividend
declared, being appropriately authorised and no longer
at the discretion of the entity, on or before the end of
the reporting period but not distributed at the end of the
reporting period.
(x) Earnings per share
(I)
BASIC EARNINGS PER SHARE
Basic earnings per share is calculated by dividing:
• the profit attributable to owners of the Company,
excluding any costs of servicing equity other than
ordinary shares
• by the weighted average number of ordinary shares
outstanding during the financial year, adjusted for
bonus elements in ordinary shares issued during the
year and excluding treasury shares (Note 30).
(II) DILUTED EARNINGS PER SHARE
Diluted earnings per share adjusts the figures used in
the determination of basic earnings per share to take
into account:
• the after-income tax effect of interest and other
financing costs associated with dilutive potential
ordinary shares, and
• the weighted average number of additional ordinary
shares that would have been outstanding assuming the
conversion of all dilutive potential ordinary shares.
(y) Goods and Services Tax (GST)
Revenues, expenses, and assets are recognised net of
the amount of associated GST, unless the GST incurred is
not recoverable from the taxation authority. In this case it
is recognised as part of the cost of acquisition of the asset
or as part of the expense.
Receivables and payables are stated inclusive of the
amount of GST receivable or payable. The net amount of
GST recoverable from, or payable to, the taxation authority
is included with other receivables or payables in the
consolidated balance sheet.
Cash flows are presented on a gross basis. The GST
components of cash flows arising from investing or
financing activities which are recoverable from, or
payable to the taxation authority, are presented as
operating cash flows.
(z) Rounding of amounts
The Company is of a kind referred to in ASIC Corporations
Instrument 2016/191, issued by the Australian Securities
and Investments Commission, relating to the ‘rounding
off’ of amounts in the financial statements. Amounts in the
financial statements have been rounded off in accordance
with that Corporations Instrument to the nearest thousand
dollars, or in certain cases, the nearest dollar.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 55
1. Summary of significant
accounting policies (cont)
(aa) Parent entity financial information
The financial information for the parent entity, Collection
House Limited, disclosed in Note 28 has been prepared
on the same basis as the consolidated financial
statements, except as set out below.
(I)
INVESTMENTS IN SUBSIDIARIES, ASSOCIATES,
AND JOINT VENTURE ENTITIES
Investments in subsidiaries, associates and joint venture
entities are accounted for at cost in the financial
statements of Collection House Limited. Dividends
received from associates are recognised in the parent
entity’s profit or loss, rather than being deducted from the
carrying amount of these investments.
(II) TAX CONSOLIDATION LEGISLATION
Collection House Limited and its wholly owned
Australian controlled entities have implemented the
tax consolidation legislation.
The head entity, Collection House Limited, and the
controlled entities in the tax consolidated group account
for their own current and deferred tax amounts. These
tax amounts are measured as if each entity in the tax
consolidated group continues to be a stand-alone
taxpayer in its own right.
In addition to its own current and deferred tax amounts,
Collection House Limited also recognises the current tax
liabilities (or assets) and the deferred tax assets arising
from unused tax losses and unused tax credits assumed
from controlled entities in the tax consolidated group.
The entities have also entered into a tax funding
agreement under which the wholly owned entities fully
compensate Collection House Limited for any current
tax payable assumed and are compensated by Collection
House Limited for any current tax receivable and
deferred tax assets relating to unused tax losses or
unused tax credits that are transferred to Collection
House Limited under the tax consolidation legislation.
The funding amounts are determined by reference to
the amounts recognised in the wholly owned entities’
financial statements.
The amounts receivable/payable under the tax funding
agreement are due upon receipt of the funding
advice from the head entity, which is issued as soon
as practicable after the end of each financial year.
The head entity may also require payment of interim
funding amounts to assist with its obligations to pay
tax instalments.
Assets or liabilities arising under tax funding agreements
with the tax consolidated entities are recognised as
current amounts receivable from or payable to other
entities in the group.
Any difference between the amounts assumed and
amounts receivable or payable under the tax funding
agreement are recognised as a contribution to (or
distribution from) wholly owned tax consolidated entities.
2. Critical accounting estimates
and judgements
Estimates and judgements are continually evaluated and
are based on historical experience and other factors,
including expectations of future events that may have a
financial impact on the Group and that are believed to be
reasonable under the circumstances.
The Group has been impacted by both the societal and
economic impact of the COVID-19 virus. The longer-term
impact of the COVID-19 pandemic on the Australian
economy and the Group remains uncertain. The severity
of its impact will depend on its duration, customer
behaviour, the success of the Government stimulus
initiatives, and the general Australian economic recovery.
Thus, COVID-19 requires focussed considerations and
estimations, which has an impact on the valuation of the
Group’s assets and liabilities.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
56 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
2. Critical accounting estimates
and judgements (cont)
(a) Critical accounting estimates
and assumptions
The Group makes estimates and assumptions concerning
the future. The resulting accounting estimates will, by
definition, seldom equal the related actual results. The
estimates and assumptions that have a significant risk of
causing a material adjustment to the carrying amounts
of assets and liabilities within the next financial year are
discussed below.
(I)
ESTIMATED IMPAIRMENT OF GOODWILL
Annually the Group tests whether goodwill has suffered
any impairment, in accordance with the accounting
policy stated in Note 1(o). The recoverable amounts of
cash generating units have been determined based on
value in use calculations. These calculations require
the use of assumptions. Refer to Note 20 for details of
these assumptions and the potential impact of changes
to the assumptions.
(II) PDLS
PDLs are considered as purchased or originated credit
impaired (“POCI”) assets and are initially recognised at
fair value plus any directly attributable acquisition costs.
Subsequent to initial recognition, PDLs are measured
at amortised cost using the credit-adjusted effective
interest method, less/plus any impairment losses/gains.
Management continue to monitor the performance and
key estimates used in determining whether any objective
evidence exists that a PDL may be impaired. This includes:
• re-forecasting expected future cash flows every six
months. An impairment is recognised where actual
performance and re-forecast future cash flows deviate
to below the initial effective interest rate. Refer to Note
10 for further details.
• assessment of the credit-adjusted effective interest
rate, which is the implicit interest rate based on forecast
collections determined in the period of acquisition
of an individual PDL and equates to the Internal Rate
of Return (IRR) of the forecast cash flows without any
consideration of collection costs.
(III) ESTIMATED IMPAIRMENT OF NON-FINANCIAL
ASSETS AND INTANGIBLE ASSETS OTHER THAN
GOODWILL
Annually the Group tests whether the non-financial assets
or intangible assets of the Group (other than goodwill)
have suffered any impairment, in accordance with the
accounting policy stated in Note 1(i). The recoverable
amounts of cash generating units have been determined
based on value in use calculations. These calculations
require the use of assumptions.
(IV) IMPAIRMENT OF BRISBANE HEAD OFFICE
RIGHT-OF-USE ASSET
During the period the Group identified impairment
indicators in respect of the Brisbane Head office lease
right-of-use asset. Refer to Note 20 for details of the
assumptions and impairment charge recognised in the
income statement.
(V) DEFERRED TAX ASSETS
Deferred tax assets are recognised for unused tax losses
only if it is probable that future taxable amounts will be
available to utilise those losses. The Group has assessed
this probability utilising an approved budget and forecast
model. The Group has forecast that it is probable that
sufficient taxable income will be generated in the future to
utilise the deferred tax asset recognised at 30 June 2021.
The Group’s ability to generate future taxable income is
dependent on the successful execution of its strategic
plan, as disclosed in Note 1(a)(v) Going Concern. In line
with the forecasted utilisation, the Group has not brought
to account a deferred tax asset in respect of the operating
tax loss related to the current financial year.
Unrecognised tax losses remain available for use in future
periods and have no expiry date. Refer to Note 7 and Note
19 for further information.
(b) Critical judgements in applying the
entity’s accounting policies
(I)
EMPLOYEE BENEFITS
Management judgment is applied in determining the
key assumptions used in the calculation of long service
leave at balance date, including future increases in wages
and salaries, future on cost rates, discount rates, and
experience of employee departures and period of service.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 57
2. Critical accounting estimates
and judgements (cont)
(b) Critical judgements in applying the
entity’s accounting policies (cont)
(II) USEFUL LIVES OF PROPERTY, PLANT AND
EQUIPMENT, AND INTANGIBLE ASSETS OTHER
THAN GOODWILL
The Group’s management determines the estimated
useful lives and related depreciation and amortisation
charges for property, plant and equipment at the
time of acquisition. As described in Note 1(n) useful
lives are reviewed regularly throughout the year for
appropriateness.
(III) LEASE TERMS USED IN AASB 16
Management uses judgement when determining the
lease term if the contract contains options to extend or
terminate the lease.
(IV) GOING CONCERN
The Directors, having consideration for the current state
of the Group’s operations, its cash flows, the recently
completed recapitalisation process leading to the partial
repayment of debt, and the ongoing loan facilities with
the lenders and Credit Corp Group, consider the Group
will be able to pay its debts as and when they fall due for
the period of at least 12 months from the date of signing
the Group’s full-year financial statements for the period
ended 30 June 2021. Refer to Note 1(a) for more details.
3. Financial risk management
The Group’s financial assets and liabilities consist mainly
of PDLs, deposits with banks, trade and other receivables,
payables and borrowings.
The Group’s activities expose it to a variety of financial
risks: market risk (including currency risk and interest rate
risk), credit risk and liquidity risk. The Group’s overall risk
management program focuses on the unpredictability of
financial markets and seeks to minimise potential adverse
effects on the financial performance of the Group. The
Group uses different methods to measure different types
of risk to which it is exposed. These methods include
sensitivity analysis in the case of interest rate and foreign
exchange risks, and aging analysis for credit risk.
Risk management is carried out by the Finance
Team under policies approved by the Audit and Risk
Management Committee of the Board. Under the authority
of the Board of Directors the Audit and Risk Management
Committee ensures that the total risk exposure of the
Group is consistent with the Business Strategy and within
the risk tolerance of the Group. Regular risk reports are
tabled before the Audit and Risk Management Committee.
Within this framework, the Finance Team identifies,
evaluates and manages financial risks in close co-
operation with the Group’s operating units.
(a) Market risk
Market risk is the risk that changes in market prices such
as foreign exchange rates and interest rates will affect the
Group’s income.
(I)
FOREIGN EXCHANGE RISK
The Group operates internationally and is exposed to
foreign exchange risk arising from various currency
exposures, primarily with respect to the New Zealand (NZ)
Dollar and the Philippine Peso. Fluctuations in either of
these currencies may impact the Group’s results.
Foreign exchange risk arises from future commercial
transactions and recognised assets and liabilities
denominated in a currency that is not the entity’s
functional currency.
Sensitivity
At 30 June 2021, had the Australian Dollar weakened/
strengthened by 10% against the NZ Dollar or the
Philippine Peso with all other variables held constant, the
impact for the year would have been immaterial to both
profit for the year and equity.
(II) CASH FLOW AND FAIR VALUE INTEREST RATE RISK
The Group’s main interest rate risk arises from long term
borrowings. Borrowings issued at variable rates expose
the Group to cash flow interest rate risk. During 2021
and 2020, the Group borrowings at variable rates were
denominated in Australian Dollars only.
All aspects of the financing arrangements, including
interest rate structuring are reviewed as required during
the life of the facility.
The Group analyses interest rate exposure in the context
of current economic conditions. Management monitors the
impact on profits of specific interest rate increases, and
annual budgets and ongoing forecasts are framed based
upon Group and market expectations of interest rate
levels for the coming year.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
58 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
3. Financial risk management
(a) Market risk (cont)
(III) EQUITY RISK
The Group designated the investment in Volt Corporation Ltd as equity securities at fair value through other
comprehensive income (FVOCI) because these equity securities represent investments that the Group intends to hold
for the long term for strategic purposes. The fair value changes will impact other comprehensive income and reserve.
Fair value is currently determined currently based on the valuation done by the Company as Volt Corporation Ltd’s
shares are not traded in the active market at reporting period. More details can be found in Note 12.
As at the reporting date, the Group had the following variable rate borrowings:
2021
2020
CONSOLIDATED
WEIGHTED
AVERAGE
INTEREST RATE
%
BALANCE
$’000
WEIGHTED
AVERAGE
INTEREST RATE
%
BALANCE
$’000
Borrowings
6.8%
61,152
3.3%
214,857
Lease Liabilities
4.8%
30,144
4.4%
37,566
Net exposure to cash flow interest rate risk
91,296
252,423
SENSITIVITY
At reporting date, the effect on profit and equity as a result of changes in interest rate, with all other variables remaining
consistent would be as follow:
INTEREST RATE RISK
-25 BPS
+25 BPS
CONSOLIDATED 2021
CARRYING AMOUNT
$’000
PROFIT
$’000
EQUITY
$’000
PROFIT
$’000
EQUITY
$’000
Borrowings
61,152
107
107
(107)
(107)
Lease Liabilities
30,144
53
53
(53)
(53)
Total increase/(decrease) in financial liabilities
160
160
(160)
(160)
INTEREST RATE RISK
-25 BPS
+25 BPS
CONSOLIDATED 2020
CARRYING AMOUNT
$’000
PROFIT
$’000
EQUITY
$’000
PROFIT
$’000
EQUITY
$’000
Borrowings
214,857
376
376
(376)
(376)
Lease Liabilities
37,566
66
66
(66)
(66)
Total increase/(decrease) in financial liabilities
442
442
(442)
(442)
Other financial assets and liabilities are not interest bearing and therefore are not subject to interest rate risk.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 59
3. Financial risk management (cont)
(b) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet
its contractual obligations, and arises principally from cash and cash equivalents, as well as credit exposures to clients,
including outstanding receivables and committed transactions.
The carrying amount of financial assets represents the maximum credit exposure.
2021
$’000
2020
$’000
Cash and cash equivalents
7,288
9,656
Receivables
10,680
13,311
Purchased debt ledgers
12,881
184,728
Other assets
1,667
222
Total financial assets
32,516
207,917
Credit risk in relation to PDLs is managed via managements’ approach in determining the initial purchase price to
pay for a portfolio of debt. At acquisition, the PDL is initially recognised at fair value at a portfolio level, being the
transaction price and thereafter at amortised cost, less any impairment losses. Most PDLs, by their nature are impaired
on acquisition which is reflected in the fair value at acquisition. Amortised cost is measured as the present value of
forecast future of cash flows using the effective interest rate method. The effective interest rate is calculated on initial
recognition and reflects a constant periodic return on the carrying value of the loans.
Management continuously monitor cash flows and the carrying value of the PDLs. An impairment is assessed on a
regular basis by management and is identified on a portfolio basis following evidence that the PDL is impaired. An
impairment is recognised where actual performance and re-forecast future cash flows deviate to below the initial
effective interest rate. Re-forecast of future cash flows can be caused by various factors including changes in customer
expectations, changes in Management Collection strategy and approach, or market impacts. No impairment charge
was recognised during the year ended 30 June 2021 (2020: $238,890,000). All income from the recovery of PDLs
has been recognised as interest. Ongoing credit risk is managed through the application of a valuation model, which
forecasts recoverability based on the historical experience and future predictions of the company based on metrics
such as recoverability, debt type, age, and customer status.
The Group has no significant concentrations of trade credit risk. The Group has policies in place to ensure that services
are made to customers with an appropriate credit history.
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade
and other receivables. Refer to Note 9 for further details.
The fair value of the above financial assets at the end of reporting period are:
LEVEL
HIERARCHY
2021
$’000
2020
$’000
Cash and cash equivalents
Level 1
7,288
9,656
Receivables
Level 3
10,680
13,311
Purchased debt ledgers
Level 3
12,881
184,728
Other assets
Level 3
1,667
222
Total financial assets
32,516
207,917
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
60 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
3. Financial risk management (cont)
(c) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial
liabilities that are settled by delivering cash or another financial asset.
Prudent liquidity risk management implies maintaining sufficient cash and the availability of funding through an
adequate amount of committed credit facilities to meet obligations when due. Due to the dynamic nature of
the underlying businesses, the Finance Team aims to maintain flexibility in funding by keeping committed credit
lines available.
Management monitors rolling forecasts of the Group’s liquidity reserve (comprising the undrawn borrowing facilities
below) and cash and cash equivalents on the basis of expected cash flow. Cash flows are forecast on a day-to-day
basis across the Group to ensure that sufficient funds are available to meet requirements on the basis of expected
cash flows. In addition, the Group’s liquidity management policy involves projecting cash flows in major currencies
and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against
internal and external regulatory requirements and maintaining debt financing plans.
Financing arrangements
At 30 June 2021, there are no undrawn borrowing facilities, with no group set off and term debt option available at the
end of reporting period (2020: nil).
The Group is required to keep the finance provider fully informed of relevant details of the Group as they arise.
Further details of the banking facility are set out in Note 18.
Maturities of financial liabilities
The table below analyses the Group’s financial liabilities into relevant maturity groupings based on the remaining
period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual
undiscounted cash flows. Balances due within 12 months equal their carrying balances, as the impact of discounting
is not significant.
CONTRACTUAL MATURITIES OF
FINANCIAL LIABILITIES 2021
NOTES
LESS THAN
1 YEAR
$’000
BETWEEN
1 AND
5 YEARS
$’000
OVER
5 YEARS
$’000
TOTAL
CARRYING
AMOUNT
$’000
Non-derivatives
Payables
15
9,059
–
–
9,059
Borrowings
17
11,733
49,419
–
61,152
Lease liabilities
18
6,194
23,950
–
30,144
Other financial liabilities*
18
1,185
160
–
1,345
Total non-derivatives
28,171
73,529
–
101,700
*
excludes Lease liabilities
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 61
3. Financial risk management (cont)
(c) Liquidity risk (cont)
CONTRACTUAL MATURITIES OF
FINANCIAL LIABILITIES 2020
NOTES
LESS THAN
1 YEAR
$’000
BETWEEN
1 AND
5 YEARS
$’000
OVER
5 YEARS
$’000
TOTAL
CARRYING
AMOUNT
$’000
Non-derivatives
Payables
15
13,212
–
–
13,212
Borrowings
17
214,857
–
–
214,857
Lease liabilities
18
6,892
30,341
333
37,566
Other financial liabilities*
18
633
–
–
633
Total non-derivatives
235,594
30,341
333
266,268
*excludes Lease liabilities
4. Segment information
(a) Description of segments
Individual business segments are identified on the basis of grouping individual products or services subject to similar
risks and returns. The business segments reported are: Collection Services and Purchased Debt Ledgers. The Group
has identified its operating segments based on the internal reports that are reviewed and used by the Chief Executive
Officer in assessing performance and determining the allocation of resources.
The consolidated entity is organised on a global basis into the following divisions by product and service type.
Collection Services
The earning of commissions on the collection of debts for clients.
Purchased Debt Ledgers
The collection of debts from client ledgers acquired by the Group.
All other segments
All other segments include unallocated revenue and expenses, intersegment eliminations, interest, borrowings, and
income tax expenses.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
62 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
4. Segment information (cont)
(b) Segment information provided to the Board
2021
COLLECTION
SERVICES
$’000
PURCHASED DEBT
LEDGERS
$’000
ALL OTHER
SEGMENTS
$’000
CONSOLIDATED
$’000
Segment revenue
Sales
56,300
–
–
56,300
Intersegment sales
–
–
(11)
(11)
Total sales revenue
56,300
–
(11)
56,289
Interest and other income
–
19,038
–
19,038
Total segment revenue
56,300
19,038
(11)
75,327
Segment result
Segment result
441
(3,134)
(5,654)
(8,347)
Restructuring expenses
–
–
(8,007)
(8,007)
Non-recurring one-off costs
–
–
(5,956)
(5,956)
Impairment expense: Property, plant and
equipment
–
–
(2,612)
(2,612)
Impairment expense: Purchase Debt Ledger
–
–
–
–
Interest expense and borrowing costs
–
–
(6,948)
(6,948)
Profit before income tax
(31,870)
Income tax expense
(120)
Profit for the year
(31,990)
Segment assets and liabilities
Segment assets
110,275
33,537
2,267
146,079
Segment liabilities
44,430
63,004
(1,166)
106,268
Other segment information
Acquisitions of property, plant and
equipment, intangibles, and other non-current
segment assets
1,258
6,790
–
8,048
Depreciation and amortisation expense
4,829
1,935
2,693
9,457
Other non-cash expenses
557
12,204
3,084
15,845
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 63
4. Segment information (cont)
(b) Segment information provided to the Board (cont)
2020
COLLECTION
SERVICES
$’000
PURCHASED DEBT
LEDGERS
$’000
ALL OTHER
SEGMENTS
$’000
CONSOLIDATED
$’000
Segment revenue
Sales
65,113
–
–
65,113
Intersegment sales
–
–
(212)
(212)
Total sales revenue
65,113
–
(212)
64,901
Interest and other income
–
86,746
–
86,746
Total segment revenue
65,113
86,746
(212)
151,647
Segment result
Segment result
8,706
42,550
(9,602)
41,654
Restructuring expense
–
–
(63)
(63)
Purchase Debt Ledger – Impairment
–
(238,890)
–
(238,890)
Interest expense and borrowing costs
–
–
(9,751)
(9,751)
Profit before income tax
(207,050)
Income tax expense
61,981
Profit for the year
(145,070)
Segment assets and liabilities
Segment assets
85,427
250,539
2,599
338,565
Segment liabilities
53,636
218,080
(868)
265,446
Other segment information
Acquisitions of property, plant and equipment,
intangibles, and other non-current segment assets
3,606
39,059
–
42,665
Depreciation and amortisation expense
4,358
3,080
2,971
10,409
Other non-cash expenses
692
267,967
742
269,401
(c) Geographical information
The consolidated entity operates in two main geographical areas, Australia and New Zealand.
SEGMENT REVENUES FROM
SALES TO EXTERNAL CUSTOMERS
SEGMENT ASSETS
ACQUISITIONS OF PROPERTY,
PLANT AND EQUIPMENT,
INTANGIBLES AND OTHER NON-
CURRENT SEGMENT ASSETS
2021
$’000
2020
$’000
2021
$’000
2020
$’000
2021
$’000
2020
$’000
Australia
62,518
136,054
132,572
325,238
5,732
34,248
New Zealand
12,464
14,880
12,017
9,546
2,294
8,347
Philippines
345
713
1,490
3,781
22
70
75,327
151,647
146,079
338,565
8,045
42,665
Segment revenues are allocated based on the country in which the customer is located. Segment assets and capital
expenditure are allocated based on where the assets are located.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
64 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
4. Segment information (cont)
(c) Geographical information (cont)
(I)
ACCOUNTING POLICIES
Segment information is prepared in conformity with the accounting policies of the entity as disclosed in Note 1 (c) and
AASB 8 Operating Segments.
Segment revenues, expenses, assets, and liabilities are those that are directly attributable to a segment and the
relevant portion that can be allocated to the segment on a reasonable basis. Segment assets include all assets used
by a segment and consist primarily of operating cash, receivables, property, plant and equipment and goodwill and
other intangible assets, net of related provisions. While most of these assets can be directly attributable to individual
segments, the carrying amounts of certain assets used jointly by segments are allocated based on reasonable
estimates of usage. Segment liabilities consist primarily of trade and other payables, employee benefits and interest-
bearing liabilities. Segment assets and liabilities do not include income taxes.
Unallocated items mainly comprise interest or dividend earning assets and revenue, interest bearing loans, borrowing
costs and corporate assets and expenses.
Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to
be used for more than one period.
(d) Other segment information
Fees for services provided between segments are carried out at arm’s length and are eliminated on consolidation.
The revenue from external parties reported to the chief operating decision maker is consistent with that in the income
statement.
5. Revenue
CONSOLIDATED
2021
$’000
2020
$’000
Gain on sale of PDLs
(1,336)
6,367
Call option income
–
617
Sublease income
853
672
Other
1,679
792
Other Revenue from continuing operations
1,196
8,448
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 65
6. Expenses
CONSOLIDATED
2021
$’000
2020
$’000
Profit before income tax includes the following specific expenses:
Depreciation
Leasehold improvements, plant and equipment
6,114
6,454
Total depreciation
6,114
6,454
Amortisation
Computer software
3,182
3,441
Customer contracts
161
158
Stamp Duty
–
356
Total amortisation
3,343
3,955
Total depreciation and amortisation
9,457
10,409
Finance expenses
Interest and finance charges paid/payable
5,286
7,809
Lease interest
1,662
1,942
Finance costs expensed
6,948
9,751
Rental and Lease expense
Lease expenses
1
25
Rent and outgoings
457
958
Rental and Lease expenses
458
983
Employee Expenses
Employee Expenses
57,911
64,075
JobKeeper Receipts*
(7,176)
(6,649)
Total expense relating to Employee Expenses
50,735
57,426
*
The payments received from the ATO for the JobKeeper scheme are to be accounted for as a Government Grant. Grant-related income is presented as
part of profit or loss. The JobKeeper payments received are deducted in the reporting of the related expense, under employee expenses.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
66 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
7. Income tax expense
CONSOLIDATED
2021
$’000
2020
$’000
(a) Profit before income tax includes the following specific expenses:
Income tax expense – Profit/(Loss) from continuing operations
120
(61,980)
Income tax expense is attributable to:
Current tax
(12,209)
6
Deferred tax
12,248
(62,065)
Under/(over) provided in previous years
81
79
Aggregate income tax expense
120
(61,980)
Deferred income tax (revenue) expense included in income tax expense comprises:
Decrease/(increase) in deferred tax assets (Note 19)
16,565
(58,444)
(Decrease)/increase in deferred tax liabilities (Note 19)
(4,317)
(3,621)
12,248
(62,065)
(b) Numerical reconciliation of income tax expense to prima facie tax payable
Profit/(Loss) from continuing operations before income tax expense
(31,870)
(207,050)
Tax at the Australian tax rate of 30% (2020: 30%)
(9,561)
(62,115)
Tax effect of amounts which are not deductible/(taxable) in calculating taxable income:
Non-deductible expenses
16
32
Effect of tax rates in foreign jurisdictions
113
24
Tax exempt (income)/loss
–
–
(9,432)
(62,059)
Adjustments for current tax of prior periods
81
79
Australian deferred tax assets not brought to account for the year
8,880
–
New Zealand deferred tax assets not brought to account for the year
591
–
9,552
79
Income tax expense/(benefit)
120
(61,980)
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 67
8. Cash and cash equivalents
(a) Reconciliation of cash at the end of the year
The above figures are reconciled to cash at the end of the financial year as shown in the statement of cash flows
as follows:
CONSOLIDATED
2021
$’000
2020
$’000
Cash at bank and on hand
7,288
9,656
Balances per statement of cash flows
7,288
9,656
9. Trade and other receivables
CONSOLIDATED
2021
$’000
2020
$’000
Current
Net trade receivables
Trade receivables
3,288
4,854
Provision for impairment of receivables (a)
(201)
(238)
3,087
4,616
Accrued revenue
3,818
2,724
Other assets
184
524
JobKeeper receivable
–
2,817
Sublease receivable
519
153
Prepaid expenses
2,526
2,477
10,134
13,311
Non-current
Sublease receivable
460
469
Prepaid expenses
86
271
546
740
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
68 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
9. Trade and other receivables (cont)
(a) Impaired trade receivables
As at 30 June 2021 current trade receivables of the Group were assessed for potential impairment, with a provision
recognised of $201,000 (2020: $238,000). The individually impaired receivables mainly relate to debtors which have
been outstanding for more than 90 days. It has been assessed that a portion of these receivables are expected to be
recovered.
There is no significant impact from COVID-19 on the trade receivables’ carrying value and the ageing of potential
impaired debt has not materially increased when compared with the Group’s total trade receivables’ carrying value.
Movements in the provision for impairment of receivables are as follows:
CONSOLIDATED
2021
$’000
2020
$’000
At 1 July
238
146
Provision for impairment recognised during the year
304
393
Receivables written off during the year as uncollectable
–
(47)
Unused amount reversed
(341)
(254)
201
238
The creation and release of the provision for impaired receivables has been included in ‘other expenses’ in the income
statement. Amounts charged to the allowance account are generally written off when there is no expectation of
recovering additional cash.
The other classes within trade and other receivables do not contain impaired assets and are not past due. Based on
the credit history of these other classes, it is expected that these amounts will be received when due. The Group does
not hold any collateral in relation to these receivables.
(b) Past due but not impaired
As at 30 June 2021, trade receivables of the Group of $1,488,000 (2020: $2,477,000) were past due but not impaired.
These relate to a number of independent customers for whom there is no recent history of default.
The ageing analysis of these trade receivables is as follows:
CONSOLIDATED
2021
$’000
2020
$’000
Up to 3 months
977
1,331
Over 3 months
511
1,146
1,488
2,477
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 69
10. Purchased debt ledgers
CONSOLIDATED
2021
$’000
2020
$’000
Current
2,920
172,541
Non-current
9,961
12,187
12,881
184,728
At beginning of year
184,728
410,303
Additions
6,798
38,946
Impairment
–
(238,890)
Legal and court costs
–
3,140
Gross PDL Collections
(30,712)
(97,780)
Interest income
18,887
79,261
Collection Service Fee
(5,297)
–
Exchange differences
(420)
–
Disposal of PDLs
(161,103)
(10,252)
At end of year
12,881
184,728
PDLs are considered as purchased or originated credit impaired (“POCI”) assets and are measured at amortised cost
using the effective interest rate method in accordance with AASB 9: Financial Instruments.
The credit-adjusted effective interest rate is the implicit interest rate based on forecast collections determined in the
period of acquisition of an individual PDL and equates to the Internal Rate of Return (IRR) of the forecast cash flows
without any consideration of collection costs.
Impairment
Where the carrying amount exceeds the present value of the estimated future cash flows discounted at the asset’s
original Effective Interest Rate (“EIR”), the Group recognises an impairment loss.
The Group has considered the impacts of COVID-19 on its PDL asset value taking into account such factors as any
restrictions, moratoriums, recent CLH collection performance, the impact of unemployment levels and other market
factors upon existing and new arrangements, general impacts on the Australian and New Zealand economy, and
comparable company reporting outcomes.
After assessment against the above factors, the PDL balance at 30 June 2021 has not been the subject of any
impairment adjustment.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
70 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
11. Other current assets
CONSOLIDATED
2021
$’000
2020
$’000
Other deposits
1,667
222
Current
1,667
222
12. Equity investments
CONSOLIDATED
2021
$’000
2020
$’000
Investment in Volt Corporation Ltd
3,516
4,868
3,516
4,868
At beginning of year
4,868
8,500
Fair Value adjustment
(1,352)
(3,633)
3,516
4,868
The Group designated the investment in Volt Corporation Ltd as equity securities at fair value through other
comprehensive income (FVOCI) because these equity securities represent investments that the Group intends to
hold for the long term for strategic purposes.
The investment in Volt Corporation Ltd represents the total of shares of 10,818,380 units (2020: 10,818,380).
The valuation of the investment at 30 June 2021 was estimated with reference to an equity raise completed during
the year and another that is currently underway as at the date of this report, both with the issue price being $0.325
cents per share, equating to a value of $3,516,000 (2020: $0.45 cents per share equating to a value of $4,868,000).
The changes in fair value are recognised within the asset revaluation reserve and other comprehensive income.
Fair value is based on level 3 inputs as Volt Corporation Ltd’s shares are not traded in an active market at
reporting period, thus fair value is based on the valuation done by the company, which is available in their
latest Information Memorandum (IM).
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 71
13. Property, plant and equipment
BUILDINGS
$’000
PLANT AND
EQUIPMENT
$’000
LEASEHOLD
IMPROVEMENTS
$’000
MOTOR
VEHICLES
$’000
WORK-IN-
PROGRESS
$’000
TOTAL
$’000
At 1 July 2019
Cost or fair value
–
10,046
5,914
9
300
16,269
Accumulated depreciation
–
(8,753)
(4,806)
–
–
(13,559)
Net book amount
–
1,293
1,108
9
300
2,710
Year ended 30 June 2020
Opening net book amount
–
1,293
1,108
9
300
2,710
*AASB 16: Initial recognition
32,201
–
–
–
–
32,201
Additions
–
730
224
59
–
1,013
Disposals
(1,105)
–
–
–
–
(1,105)
Depreciation charge
(5,666)
(574)
(255)
(21)
–
(6,516)
Transfers
–
17
–
–
(23)
(6)
Closing net book amount
25,430
1,466
1,077
47
277
28,297
At 30 June 2020
Cost or fair value
31,096
10,793
6,138
68
277
48,372
Accumulated depreciation
(5,666)
(9,327)
(5,061)
(21)
–
(20,075)
Net book amount
25,430
1,466
1,077
47
277
28,297
BUILDINGS
$’000
PLANT AND
EQUIPMENT
$’000
LEASEHOLD
IMPROVEMENTS
$’000
MOTOR
VEHICLES
$’000
WORK-IN-
PROGRESS
$’000
TOTAL
$’000
Year ended 30 June 2021
Opening net book amount
25,430
1,466
1,077
47
277
28,297
Additions
–
336
18
–
–
354
Disposals
(1,922)
(51)
–
–
(277)
(2,250)
Depreciation charge
(5,079)
(522)
(484)
(29)
–
(6,114)
Impairment
(2,612)
–
–
–
–
(2,612)
Exchange differences
(62)
(6)
(27)
–
–
(95)
Transfers
–
–
–
–
–
–
Closing net book amount
15,755
1,223
584
18
–
17,580
At 30 June 2021
Cost or fair value
27,384
9,303
3,734
68
–
40,489
Accumulated depreciation
(9,017)
(8,080)
(3,150)
50
–
(20,297)
Accumulated impairment
(2,612)
–
–
–
–
(2,612)
Net book amount
15,755
1,223
584
18
–
17,580
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
72 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
13. Property, plant and equipment (cont)
(a) Non-current assets pledged as security
Refer to Note 18 for information on non-current assets pledged as security by the Group.
(b) Impairment assessment
Refer to Note 20 for information about the impairment assessment of goodwill and property, plant and equipment.
14. Intangible assets
GOODWILL
$’000
COMPUTER
SOFTWARE
$’000
CUSTOMER
CONTRACTS
$’000
OTHER
INTANGIBLE
ASSETS
$’000
WORK-IN-
PROGRESS
$’000
TOTAL
$’000
At 1 July 2019
Cost or fair value
23,490
29,785
2,487
171
1,664
57,597
Accumulated amortisation
and impairment
(3,764)
(17,820)
(1,876)
(171)
(124)
(23,755)
Net book amount
19,726
11,965
611
–
1,540
33,842
Year ended 30 June 2020
Opening net book amount
19,726
11,965
611
–
1,540
33,842
Exchange differences
(2)
–
–
–
–
(2)
Additions – internal
development
–
458
–
–
2,187
2,645
Amortisation charge
–
(3,392)
(159)
–
–
(3,551)
Disposals
–
–
–
–
–
–
Transfers
–
927
–
–
(850)
77
Closing net book amount
19,724
9,958
452
–
2,877
33,011
At 30 June 2020
Cost or fair value
23,490
31,170
2,487
171
3,001
60,319
Accumulated amortisation
and impairment
(3,766)
(21,212)
(2,035)
(171)
(124)
(27,308)
Net book amount
19,724
9,958
452
–
2,877
33,011
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 73
14. Intangible assets (cont)
GOODWILL
$’000
COMPUTER
SOFTWARE
$’000
CUSTOMER
CONTRACTS
$’000
OTHER
INTANGIBLE
ASSETS
$’000
WORK-IN-
PROGRESS
$’000
TOTAL
$’000
Year ended 30 June 2021
Opening net book amount
19,724
9,958
452
–
2,877
33,011
Exchange differences
(1)
(2)
–
–
–
(3)
Additions – internal
development
–
94
–
–
810
904
Amortisation charge
–
(3,182)
(161)
–
–
(3,343)
Disposals
–
(86)
–
–
(2,392)
(2,748)
Transfers
–
821
–
–
(821)
–
Closing net book amount
19,723
7,603
291
–
494
28,091
At 30 June 2021
Cost or fair value
23,486
30,724
2,397
–
474
57,081
Accumulated amortisation and
impairment
(3,763)
(23,121)
(2,106)
–
–
(28,990)
Net book amount
19,723
7,603
291
–
474
28,091
*
Work in progress includes capitalised development costs of an internally generated intangible asset which is under development.
(a) Impairment assessment
Refer to Note 20 for information about the impairment assessment of goodwill and property, plant and equipment.
15. Trade and other payables
CONSOLIDATED
2021
$’000
2020
$’000
Trade payables
2,958
5,339
Accrued expenses
4,005
5,729
Other payables
2,096
2,144
9,059
13,212
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
74 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
16. Provisions
CONSOLIDATED
2021
$’000
2020
$’000
Current
Employee benefits
3,851
3,832
Make good
519
552
Fringe benefits tax
3
35
4,373
4,419
Non-current
Employee benefits
195
142
195
142
(a) Movements in provisions
Movements in each class of provision during the financial year, other than employee benefits, are set out below:
CONSOLIDATED
MAKE
GOOD
$’000
FRINGE
BENEFITS TAX
$’000
2021
Current
Carrying amount at start of year
552
35
– additional provisions recognised
67
137
– payments/provision used
(100)
(169)
Carrying amounts at end of year
519
3
2020
Current
Carrying amount at start of year
652
35
– additional provisions recognised
–
236
– payments/provision used
(100)
(236)
Carrying amount at end of year
552
35
(b) Superannuation plans
All employees are entitled to varying levels of benefits on retirement, disability, or death. The superannuation plans
provide accumulated benefits. Employees contribute to the plans at various percentages of their wages and salaries.
Where there is a legal requirement the Company contributes the appropriate statutory percentage of employees’
salaries and wages.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 75
17. Other financial liabilities
CONSOLIDATED
2021
$’000
2020
$’000
Current
Lease liabilities
6,194
6,892
Other current financial liabilities
1,185
633
7,379
7,525
Non-current
Lease liabilities
23,950
30,674
Other non-current financial liabilities
160
–
24,110
30,674
The total cash outflow for leases during the year was $7,983,000 (2020: $7,649,000), which comprises of the payment
of principal and interest.
18. Borrowings
CONSOLIDATED
2021
$’000
2020
$’000
Secured
Other loans – current
10,063
–
Bank loans – current
1,670
214,857
Bank loans – non-current
49,419
–
Total secured borrowings
61,152
214,857
All bank loans are denominated in Australian dollars and are secured by a fixed and floating charge over all of the assets
and any uncalled capital of the parent entity and of its Australian-owned entities.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
76 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
18. Borrowings (cont)
CONSOLIDATED
NOTES
2021
$’000
2020
$’000
Current
Floating charge
Cash and cash equivalents
8
7,288
9,656
Receivables
9
10,134
13,311
Purchased debt ledgers
10
2,920
172,541
Total current assets pledged as security
20,342
195,508
Non-current
Floating charge
Receivables
9
546
740
Purchased debt ledgers
10
9,961
12,188
Plant and equipment*
13
4,409
2,805
Total non-current assets pledged as security
14,916
15,733
Total assets pledged as security
35,258
211,241
*
This excludes ROU assets $13,171,000 (2020: $25,678,000) that were recognised due to AASB16.
(a) Fair value
The carrying amounts and fair values of borrowings at the end of reporting period are:
2021
2020
CONSOLIDATED
CARRYING
AMOUNT
$’000
FAIR VALUE
$’000
CARRYING
AMOUNT
$’000
FAIR VALUE
$’000
On-balance sheet (i)
Non-traded financial liabilities
Other loans – current
10,063
10,063
–
–
Bank loans – current
1,670
1,670
214,857
214,857
Bank loans – non-current
49,419
49,419
–
–
61,152
61,152
214,857
214,857
As noted, none of the classes of liabilities are readily traded on organised markets in standardised form.
(I)
ON BALANCE SHEET ($’000)
The fair value of current borrowings equals their carrying amount.
Coincident with completion of the PDL sale transaction in December 2020, the Company refinanced its remaining senior
debt on the following basis:
• $20,000 Fully amortising Term Loan Facility (Facility A) with interest payable on a monthly basis and scheduled
quarterly repayments over a three-year term.
• $41,566 Term Loan Facility (Facility B) with a term of three years, capitalising interest, and cash sweep payments
at times when the Group’s cash balance is above a level agreed with the lenders.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 77
18. Borrowings (cont)
(a) Fair value (cont)
• As a part of the PDL sale transaction, the purchaser provided a loan of $15,000 with a maturity of two years with
interest capitalised during the term.
Hence, total debt was $76,566 ($61,566 + $15,000 from above) at the time. Since then, $11,588 of senior debt has
been repaid and $5,437 of the purchaser other loan has been repaid.
Refer to the Group’s capital management are disclosed in Note 21 (h) for more details.
(b) Risk exposures
Information about the Group’s exposure to interest rate and foreign currency changes is provided in Note 3.
For an analysis of the sensitivity of borrowings to interest rate risk and foreign exchange risk refer to Note 3.
19. Deferred tax balances
(a) Deferred tax asset
CONSOLIDATED
2021
$’000
2020
$’000
The balance comprises temporary differences attributable to:
Tax losses
44,022
591
Project Costs – Refinancing Transaction
1,630
714
Fair Value Adjustment – Volt Investment
1,495
1,090
Lease Liability – AASB 16
9,021
11,220
PDL Impairment
342
59,113
Provisions and employee benefits
1,543
1,562
Accruals
199
124
Share based payments
65
65
Doubtful debts
60
72
Other
30
16
58,407
74,567
Set-off of deferred tax liabilities pursuant to set-off provisions (b)
(6,518)
(10,835)
Net deferred tax assets
51,889
63,732
Movements:
Opening balance at 1 July
74,567
3,704
Credited / (charged) to the retained earnings
–
11,240
Credited / (charged) to the fair value reserve
405
1,090
Credited / (charged) to the current tax asset
(12,335)
89
Credited / (charged) to the income statement
(4,230)
58,444
Closing balance at 30 June
58,407
74,567
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
78 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
19. Deferred tax balances (cont)
(a) Deferred tax asset (cont)
MOVEMENTS –
CONSOLIDATED
TAX
LOSSES
$’000
PROVISIONS
& EMPLOYEE
BENEFITS
$’000
LEASE
INCENTIVE
$’000
LEASE
LIABILITY
$’000
SHARE
BASED
PAYMENTS
$’000
ACCRUALS
$’000
PDL
IMPAIR-
MENT
$’000
FAIR
VALUE
– VOLT
$’000
DOUBTFUL
DEBTS
$’000
PROJECT
COST
$’000
OTHERS
$’000
TOTAL
$’000
As at 1 July 2019
161
1,578
1,688
–
156
77
–
–
44
–
–
3,704
– to retained
earnings
–
–
(1,688)
12,928
–
–
–
–
–
–
–
11,240
– to profit or loss
331
(16)
–
(1,698)
(91)
47
59,113
–
28
714
16
58,444
– to Fair value reserve
–
–
–
–
–
–
–
1,090
–
–
–
1,090
– to current tax
liability
99
–
–
(10)
–
–
–
–
–
–
–
89
As at 30 June 2020
591
1,562
–
11,220
65
124
59,113
1,090
72
714
16
74,567
As at 1 July 2020
591
1,562
–
11,220
65
124
59,113
1,090
72
714
16
74,567
– to retained earnings
–
–
–
–
–
–
–
–
–
–
–
–
– to profit or loss
55,766
(19)
–
(2,199)
–
75
(58,771)
–
(12)
916
14
(4,230)
– to Fair value reserve
–
–
–
–
–
–
–
405
–
–
–
405
– to current tax asset
(12,335)
–
–
–
–
–
–
–
–
–
–
(12,335)
As at 30 June 2021
44,022
1,543
–
9,021
65
199
342
1,495
60
1,630
30
58,407
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 79
19.
Deferred tax balances (cont)
(b) Deferred tax liabilities
The balance comprises temporary differences attributable to:
CONSOLIDATED
2021
$’000
2020
$’000
The balance comprises temporary differences attributable to:
Property, plant and equipment
6,219
9,798
Purchased Debt Ledger (Legal and Court cost)
–
–
Sublease Receivables
294
187
JobKeeper Receivables
–
845
Other
4
5
6,518
10,835
Set-off of deferred tax liabilities pursuant to set-off provisions (a)
(6,518)
(10,835)
Net deferred tax liabilities
–
–
Movements:
Opening balance at 1 July
10,835
5,209
Charged/(credited) to the retained earnings
–
9,612
Charged/(credited) to the income statement (Note 7)
(4,317)
(3,986)
Closing balance at 30 June
6,518
10,835
PROPERTY PLANT
AND EQUIPMENT
$’000
PURCHASED DEBT
LEDGER – LEGAL
AND COURT COST
$’000
SUBLEASE
RECEIVABLES
$’000
JOBKEEPER
RECEIVABLES
$’000
PREPAYMENTS
$’000
TOTAL
$’000
As at 1 July 2019
2,600
2,602
–
–
7
5,209
– to retained earnings
9,612
–
–
–
–
9,612
– to profit or loss
(2,414)
(2,602)
187
845
(2)
(3,986)
As at 30 June 2020
9,798
–
187
845
5
10,835
As at 1 July 2020
9,798
–
187
845
5
10,835
– to retained earnings
–
–
–
–
–
–
– to profit or loss
(3,579)
–
107
(845)
–
(4,317)
As at 30 June 2021
6,219
–
294
–
5
6,518
(c) Deferred tax assets not recognised
The amount of deductible temporary differences and unused tax losses for which no deferred tax assets have been
brought to account:
• Tax losses: operating losses $31,710,000 (2020: nil)
The benefits of the above temporary differences and unused tax losses will only be realised if the conditions for
deductibility occur. These amounts have no expiry date.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
80 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
20. Impairment assessment
The Group performs an impairment test annually for intangible assets with indefinite useful life, such as goodwill, and
for property, plant and equipment and other intangible assets when indicators of impairment exist. During the period
the Group has identified the following impairment indicator:
• client imposed restrictions on collection activities as a result of the on-going COVID-19 pandemic; and
• unutilised floor space in Brisbane Head office as a result of the structural changes to the business and the ongoing
COVID-19 impacts, resulting in an indicator of impairment in respect of that individual lease right-of-use asset.
(a) Goodwill impairment assessment
All goodwill is allocated to the Company’s Collection Services cash generating unit (CGU).
The recoverable amount of the CGU is determined based on value in use calculations. These calculations use cash
flow projections based on the financial budget for the first year approved by management, which is then extrapolated
to cover an additional 4-year period (total 5 years) and include a terminal value calculation, which used a long-term
growth rate of 2.5% (2020: 2.5%) and is in line with the long-term targeted inflation set by the Reserve Bank of Australia.
The key assumptions utilised in the Group’s discounted cash flow forecasts are detailed below.
GROWTH RATE (REVENUE)
GROWTH RATE (EXPENSES)
DISCOUNT RATE*
CGU
2021
%
2020
%
2021
%
2020
%
2021
%
2020
%
Collection services
5.0 to 15.0
3.9 to 5.0
2.0 to 15.0
0.0 to 4.7
13.14
13.11
*
In performing the value in use calculation, the Group has applied the pre-tax discount weighted average cost of capital to discount the forecast
future attributable post tax cash flows.
(I)
IMPAIRMENT CHARGE
As a result of the impairment assessment, the Group has determined that the carrying value of intangible assets does
not exceed their value in use, and no impairment charge was required (2020: Nil).
(II) IMPACT OF POSSIBLE CHANGES IN KEY ASSUMPTIONS
Collection services
There is a substantial margin between the calculated value in use and the carrying value of all assets within the CGU,
and as such there is no reasonably possible change in key assumptions that would give rise to an impairment.
The impairment assessment includes stress tests done on the key assumptions i.e. changes in WACC and cash inflow
used to calculate the value in use (VIU) and there is no indication of impairment due to the substantial headroom to
support the carrying value of Goodwill.
COVID-19
The Group’s performance and operations have been impacted by both the societal and economic impact of the
COVID-19 virus. The value-in-use calculations use cash flow projections that have incorporated the COVID-19 effects.
Growth rates have been adjusted to a conservative position due to the COVID-19 challenges, to reflect the increased
volatility and uncertainty in the impairment model.
WACC
The change in WACC is the reflection of current cost of debt and equity. The change is due to market conditions and
the general impact of higher debt over the whole financial year.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 81
20. Impairment assessment (cont)
(b) Brisbane Head office right of use impairment assessment
Unutilised floor space in Brisbane Head office as a result of the structural changes to the business and the ongoing
COVID-19 impacts, resulting in an indicator of impairment in respect of that individual lease right-of-use asset.
Whilst the asset does not generate cash inflows that are largely independent of other assets, AASB 136 Impairment of
Assets provides an exception in circumstances where an asset’s value in use (VIU) can be estimated to be close to its
fair value less costs of disposal (FVLCD) and FVLCD can be measured.
The Group have determined the right of use asset’s VIU to be close to its FVLCD on the following basis:
• the unused floor space can be sublet;
• FVLCD can be measured by way of the market rent receivable from sub-letting; and
• the period of ‘own use’ is minimal compared to the remaining period of the head lease available for sub-letting.
(I)
IMPAIRMENT CHARGE
As a result of the impairment assessment, the Group has determined that the carrying value of the Brisbane Head
office right of use asset exceeds its FVLCD. The shortfall of $2,612,000 between the asset’s carrying value and FVLCD
has been recognised as an impairment charge in the income statement.
21. Contributed equity
(a) Share capital
COMPANY
COMPANY
2021
SHARES
2020
SHARES
2021
$’000
2020
$’000
Ordinary shares – fully paid
141,948,162
141,948,162
120,260
120,260
Treasury shares
(420,901)
(512,317)
(571)
(693)
Total contributed equity
141,527,261
141,435,845
119,689
119,567
(b) Movements in ordinary share capital
Issues of ordinary shares during the year
DETAILS
NUMBER OF SHARES
$’000
1 July 2019
Opening balance
139,279,060
117,077
12 September 2019
Performance Rights Plan
1,141,738
1,416
Less: Transaction costs arising on share issues
–
(7)
30 September 2019
Share Issuance: Exempt Employee Share Plan
154,795
197
25 October 2019
Dividend reinvestment plan issues
1,372,569
1,584
Less: Transaction costs arising on share issues
–
(7)
30 June 2020
Closing balance
141,948,162
120,260
1 July 2020
Opening balance
141,948,162
120,260
No movement during the year
–
–
30 June 2021
Closing balance
141,948,162
120,260
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
82 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
21. Contributed equity (cont)
(c) Ordinary shares
Ordinary shares entitle the holder to participate in
dividends and the proceeds on winding up of the
company in proportion to the number of and amounts
paid on the shares held.
On a show of hands every holder of ordinary shares
present at a meeting in person or by proxy, is entitled
to one vote, and upon a poll each share is entitled to
one vote.
Ordinary shares have no par value, and the Company
does not have a limited amount of authorised capital.
(d) Treasury shares
When share capital recognised as equity is
repurchased or held by employee share plans and
subject to vesting conditions, the amount of the
consideration paid, including directly attributable
costs, is recognised as a deduction from equity. When
treasury shares are sold or reissued subsequently,
the amount received is recognised as an increase in
equity.
(e) Dividend reinvestment plan
The Company has established a dividend
reinvestment plan under which holders of ordinary
shares may elect to have all or part of their dividend
entitlements satisfied by the issue of new ordinary
shares rather than by being paid in cash. Shares are
issued under the plan at a 5% discount to the market
price. As noted in the Directors’ report, the Dividend
reinvestment plan has not been activated.
(f) Employee share scheme
Information relating to the employee share scheme,
including details of shares issued under the scheme,
is set out in Note 31.
(g) Performance rights
Information relating to the performance rights plan
adopted as a means of rewarding and incentivising
key employees, including details of rights issued
during the financial year, is set out in Note 31.
(h) Capital management
The Group’s objectives when managing capital are to
safeguard their ability to continue as a going concern,
and to provide adequate returns for shareholders and
benefits for other stakeholders.
“Capital” includes all funding provided under the
Group’s funding facility (net of cash balances for which
a right of offset is held) plus equity as shown in the
balance sheet.
In order to maintain or adjust the capital structure, the
Group may:
• draw down or repay debt funding;
• adjust the amount of dividends paid to shareholders;
• negotiate new or additional facilities or cancel existing
ones;
• return capital to shareholders or issue new shares or
• sell assets to reduce debt.
The Group manages capital to ensure that the goals
of continuing as a going concern and the provision of
acceptable stakeholder returns are met.
Arrangements with the Group’s financiers are in place
to ensure that there is sufficient credit available to
meet unforeseen circumstances should they arise.
Financing facilities are renegotiated on a regular
basis to ensure that they are sufficient for the Group’s
projected growth plus a buffer. As far as possible,
asset purchases are funded from operational cash
flow, so as to not require financing. Cash is monitored
on a daily basis to ensure that immediate and short-
term requirements can be met. During the recent
standstill period until December 2020, additional
cash monitoring and controls were added to ensure
standstill conditions were not breached including
financial covenants that had been put in place.
Detailed cash monitoring enables the Group to reduce
the risk of liquidity and going concern issues.
Management of the mix between debt and equity impacts
the Group’s Cost of Capital and hence ability to provide
returns to stakeholders, primarily the funding institutions
and shareholders. The Group maintains its debt to equity
mix in accordance with its immediate needs and forecasts
at any point in time. Effective management of the capital
structure maximises profit and hence franked dividend
returns to shareholders.
When additional funding is required, it is sourced from
either debt or equity, depending upon management’s
evaluation as to which is the most appropriate at that
point in time.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 83
21. Contributed equity (cont)
(h) Capital management (cont)
The financing facility includes all funding provided by
the Group’s main bankers. Details of financing facilities
are set out in Note 3.
Quantitative analyses are conducted by management
using contributed equity balances shown above
together with the drawn and undrawn loan balances
disclosed in Note 3.
During the first half of the Year, the Group was under
a Standstill Agreement (SA) with its lenders. With the
SA in place, the Group’s lenders agreed not to take
any action during the period to 23 December 2020
(the standstill period) in relation to any potential or
existing defaults that occurred under the facilities prior
to the commencement of the standstill period in April
2020. Subject to compliance with its terms, the SA,
among other things, modified the financial covenants
under the Group’s lending facilities during the standstill
period. In addition, the maturity dates of its lending
facilities were adjusted to 23 December 2021 and the
Group suspended any dividend or other distribution
payments.
The Group has agreed with its lenders a programme
to recapitalise the Group in order to reduce debt and
adopt appropriate financial covenants that monitor the
Group as it returns to a sustainable level. An additional
waiver was received for the March 2021 quarter
EBITDA financial covenant, with amended terms
agreed on 30 June 2021. The recapitalisation process
was completed as at 23 December 2020 with the
proceeds from a sale of the majority of its Australian
PDL assets being applied to the repayment of the
majority of its existing facilities and the provision of an
ongoing funding facility for $61.4m. There was also a
bank guarantee facility of $8.6m agreed and a short-
term loan of $15m provided by the Credit Corp Group.
See Note 18 for further detail.
22. Reserve
CONSOLIDATED
2021
$’000
2020
$’000
Fair value reserve
(3,489)
(2,542)
Share-based payments reserve
347
470
Foreign currency translation
reserve
(2,479)
(2,107)
(5,621)
(4,179)
(a) Nature and purpose of reserves
(I)
SHARE BASED PAYMENTS RESERVE
The share-based payments reserve is used to recognise
the fair value of performance rights issued to employees
that have not yet vested, or those that have vested at year
end but not yet been issued as shares.
(II) FOREIGN CURRENCY TRANSLATION RESERVE
Exchange differences arising on translation of the foreign
operations are recognised in other comprehensive
income as described in Note 1(d) and accumulated in a
separate reserve within equity. The cumulative amount
is reclassified to profit or loss when the net investment is
disposed of.
(III) FAIR VALUE RESERVE
Changes in fair value through other comprehensive
income are recognised in the Fair Value reserve. Any
changes will be net of tax thus corresponding impact from
any changes in the deferred tax are also recognised in the
Fair Value reserve.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
84 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
23. Dividends
(a) Ordinary shares
CONSOLIDATED
2021
$’000
2020
$’000
Fully franked final dividend for the year ended 30 June 2020 – nil (2019: 4.1 cents)
–
5,764
–
5,764
Dividends paid in cash or satisfied by the issue of shares under the dividend
reinvestment plan during the years ended 30 June 2021 and 2020 were as follows:
Paid in cash
–
4,180
Satisfied under the Dividend Reinvestment Plan
–
1,584
–
5,764
(b) Dividends not recognised at the end of the reporting period
No dividend has been declared for the year ended 30 June 2021 (2020: nil).
(c) Franked dividends
CONSOLIDATED
2021
$’000
2020
$’000
Franking credits available for subsequent financial years based on a tax rate of 30%
(2020: 30%)
37,645
55,414
37,645
55,414
The above amounts represent the balance of the franking account as at the end of the reporting period, adjusted for:
(a) franking credits that will arise from the payment of the amount of the provision for income tax;
(b) franking debits that will arise from the payment of dividends recognised as a liability at the reporting date;
(c) franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date; and
(d) franking credits that may be prevented from being distributed in subsequent financial years.
The consolidated amounts include franking credits that would be available to the parent entity if distributable profits of
subsidiaries were paid as dividends.
The amount of franking credits available has reduced from prior year as a result of $5,436,000 tax refunded during the
year, and expected tax receivable of $12,335,000.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 85
24. Remuneration of auditors
During the year the following fees were paid or payable for services provided by the auditor of the parent entity, its related
practices and non-related audit firms:
CONSOLIDATED
2021
$
2020
$
Audit and review services
(a) Auditors of the Company – KPMG
Audit and review of the financial statements
322,190
411,547
Other regulatory audit services
91,450
71,720
Total auditors’ remuneration
413,640
483,267
(b) Other auditors – Villaruz, Villaruz & Co (“VVC”)
Audit and review of the financial statements – Manilla
6,487
9,575
Total auditors’ remuneration
6,487
9,575
Other services
Auditors of the Company – KPMG
In relation to accounting advice and due diligence services
–
–
In relation to taxation services
287,886
267,760
287,886
267,760
25. Contingencies
(a) Contingent liabilities
The Group had contingent liabilities at 30 June 2021 in respect of:
Claims
On 15 March 2019, the Group was provided with a copy of a claim and statement of claim, which had been filed in the
Supreme Court of Queensland on the same date. The claim for damages is for $2,800,000 and proceedings are still being
defended by the Group.
Purchase Agreement with Put & Call Option with Insolve Capital Australia Pty Ltd (Balbec Capital LP)
(a) The Group had assigned five years’ cash flow to Insolve Capital Australia Pty Ltd (Balbec Capital LP) through a put
and call option agreement.
(b) The Group has the option to repurchase the residual rights to collect the remaining arrangements at the end
of the five-year agreement, at a market price determined by the performance of the accounts during the term
of the agreement.
The three purchase agreements with Put & Call option have the following expiry dates:
• 3 November 2023
• 2 December 2024
• 25 April 2025
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
86 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
25. Contingencies (cont)
(a) Contingent liabilities (cont)
Guarantees
(a) Bank Guarantees (secured) exist in respect of satisfying contract terms amounting to $8,176,610 (2020: $6,732,284).
During the period, the increase is mainly contributed by new Bank Guarantees that were required to secure
performance of new Lease premises.
(b) Guarantees and Indemnities (secured) given by the Company and certain of its subsidiaries in support of the
existing Syndicated Loan Facility provided by Westpac Banking Corporation and Commonwealth Bank of Australia,
are currently in place.
Paragraphs (a) and (b) above are secured by a Fixed and Floating charge over the assets of the Company and
certain of its subsidiaries of the Group and may give rise to liabilities in the Group, if the associates do not meet their
respective obligations under the terms of the contracts, subject to the guarantees.
No material losses are anticipated in respect of any of the above contingent liabilities.
26. Commitments
(a) Capital commitments
Capital expenditure contracted for in relation to purchased debt commitments at the reporting date but not recognised
as liabilities is as follows:
CONSOLIDATED
2021
$’000
2020
$’000
Within one year
833
13,988
Later than one year, but not later than five years
–
1,910
833
15,898
27. Related party transactions
(a) Group companies
Details of the parent company, the ultimate parent company and interests in subsidiaries are set out in Note 29.
(b) Key management personnel compensation
CONSOLIDATED
2021
$’000
2020
$’000
Short-term employee benefits
2,665,915
2,592,682
Post-employment benefits
255,683
235,195
Other long-term benefits
99,019
65,336
Termination benefits
78,461
117,619
Share-based payments
–
–
3,099,078
3,010,832
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 87
27. Related party transactions (cont)
(b) Key management personnel compensation (cont)
Detailed remuneration disclosures are provided in sections A-J of the remuneration report on pages 22 to 33.
(c) Other transactions with key management personnel or entities related to them
No other transactions were made with key management personnel or entities related to them other than as appropriate
payments for performance of their duties.
(d) Transactions with other related parties
The classes of non-director related parties are:
• wholly owned controlled entities;
• directors of related parties and their director related entities.
Transactions
There were no transactions with directors of related parties and their director related entities. Transactions with wholly
owned related parties are eliminated on consolidation.
28. Parent entity financial information
(a) Summary financial information
The individual financial statements for the parent entity show the following aggregate amounts:
CONSOLIDATED
2021
$’000
2020
$’000
Balance sheet
Current assets
25,179
20,170
Non-current assets
230,884
424,808
Total assets
256,063
444,978
Current liabilities
30,417
237,056
Non-current liabilities
129,362
76,425
Total liabilities
159,779
313,481
Shareholders’ equity
Contributed equity
119,689
119,567
Reserves
(3,142)
(2,072)
Retained earnings
(20,263)
14,002
Capital and reserves attributable to owners of Collection House Limited
96,284
131,497
Loss for the year
(34,266)
(20,486)
Total comprehensive income
(34,266)
(20,486)
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
88 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
28. Parent entity financial information (cont)
(b) Guarantees entered into by the parent entity
The parent entity has entered into guarantees with certain of its subsidiaries as set out in Note 25.
No liability was recognised by the parent entity or the consolidated entity in relation to this guarantee, as the fair value
is immaterial.
(c) Contingent liabilities of the parent entity
Refer to Note 25 for contingent liabilities entered into by the Group. For information about guarantees given by the parent
entity, please see above.
29. Subsidiaries
The consolidated financial statements incorporate the assets, liabilities, and results of the following subsidiaries in
accordance with the accounting policy described in Note 1(b):
2021
%
2020
%
Parent and Ultimate Parent company:
Collection House Limited
Controlled entities – incorporated in Australia
Safe Horizons Pty Ltd (formerly Cash flow Accelerator Pty Ltd)
100
100
ThinkMe Finance Pty Ltd
100
100
Collective Learning and Development Pty Ltd
100
100
CLH Legal Group Pty Ltd
100
100
Lion Finance Pty Ltd
100
100
Midstate CreditCollect Pty Ltd
100
100
CLH Business Services Pty Ltd
100
100
Collection House Limited Employee Share Plan Trust
100
100
Controlled entities – incorporated in New Zealand
Collection House (NZ) Limited
100
100
Lion Finance Limited
100
100
Receivables Management (NZ) Limited
100
100
Receivables Management (International) Limited
100
100
Creditnet International Limited**
–
100
Receivables Finance Limited
100
100
Southern Receivables Limited
100
100
Controlled entities – incorporated in Philippines
Collection House International BPO, Inc*
100
100
*
Collection House International BPO, Inc started up on 10 May 2012 and commenced business operations on 1 April 2013. While Collection House Limited
holds legal and beneficial ownership of 9,995 issued shares in the subsidiary, it has beneficial ownership of 5 issued shares in the subsidiary, held on trust
for Collection House Limited by each of the five appointed directors of the subsidiary, in accordance with Philippines law, representing all of the issued
shares in the subsidiary currently.
** Creditnet International Limited was sold on 31 May 2021
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 89
30. Earnings/(Loss) per share
CONSOLIDATED
2021
CENTS
2020
CENTS
(a) Basic earnings/(loss) per share
From continuing operations attributable to the ordinary equity holders of the Company
(22.5)
(103.2)
Total basic earnings per share attributable to the ordinary equity holders
of the Company
(22.5)
(103.2)
(b) Diluted earnings/(loss) per share
From continuing operations attributable to the ordinary equity holders of the Company
(22.5)
(103.2)
Total diluted earnings per share attributable to the ordinary equity holders of the
Company
(22.5)
(103.2)
(c) Reconciliations of earnings/(loss) used in calculating earnings/(loss) per share
CONSOLIDATED
2021
$’000
2020
$’000
Basic earnings/(loss) per share
Loss attributable to the ordinary equity holders of the Company used in calculating
basic earnings per share
(31,990)
(145,070)
(31,990)
(145,070)
Diluted earnings/(loss) per share
Loss attributable to the ordinary equity holders of the Company used in calculating
basic earnings per share
(31,990)
(145,070)
(31,990)
(145,070)
(d) Weighted average number of shares used as the denominator
CONSOLIDATED
2021
NUMBER
2020
NUMBER
Weighted average number of ordinary shares used as the denominator
in calculating basic earnings per share
141,948,162
140,605,045
Adjustments for calculation of diluted earnings per share:
Performance Rights
421,473
840,711
Weighted average number of ordinary shares and potential ordinary shares
used as the denominator in calculating diluted earnings per share
142,369,635
141,445,756
(e) Information concerning the classification of securities
(I)
PERFORMANCE RIGHTS
Performance rights issued to employees under the Performance Rights Plan (PRP) are considered to be potential ordinary
shares and have been included at the probability rate of 100% in the determination of diluted earnings per share to the
extent to which they are dilutive. The performance rights have not been included in the determination of basic earnings per
share. Details relating to the performance rights are set out in Note 31.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
90 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
31. Share-based payments
(a) Performance Rights Plan
In line with the executive remuneration framework, the Board has approved and adopted the Performance Rights Plan
(PRP), effective on and from 1 July 2012, as a means of rewarding and incentivising its key employees. The PRP was
extended to the then Chief Executive Officer (CEO), and to eligible employees. Future performance rights may be issued by
the Board pursuant to the PRP. The board determines the value of shares granted based on the individual’s performance.
Future performance rights may vest at the discretion of the Board, subject to not only individual service conditions being
met, but also, Company performance hurdles being achieved.
During the reporting period ending 30 June 2018, 341,071 unlisted performance rights were issued to a number of
eligible employees pursuant to the PRP and were identified as PR2018. PR2018 performance rights formally expired on
30 September 2020.
During the reporting period ending 30 June 2020, 398,068 unlisted performance rights were issued to a number of
eligible employees pursuant to the PRP and were identified as PR2019. PR2019 performance rights have an expiry date of
30 September 2021.
Both PR2018 and PR2019 performance rights were determined to be not meeting vesting conditions during the year ended
30 June 2020 and were derecognised in that financial year.
No further performance rights were issued in relation to FY20 or FY21.
Set out below are summaries of rights issued under the plan:
EFFECTIVE DATE
EXPIRY DATE
EXERCISE
PRICE
BALANCE AT
START OF
THE YEAR
GRANTED
DURING
THE YEAR
VESTED
DURING
THE YEAR
LAPSED
DURING
THE YEAR
BALANCE
AT END OF
THE YEAR
VESTED AND
ISSUABLE
AT THE END
OF THE YEAR
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
Company - 2021
Nil rights on issue
–
–
–
–
–
–
Total
–
–
–
–
–
–
Company - 2020
1 July 2016
30 September 2019
Nil
1,141,738
–
(1,141,738)
–
–
–
1 July 2017
30 September 2020
Nil
261,775
–
–
(261,775)
–
–
1 July 2019
30 September 2021
Nil
–
398,068
–
(398,068)
–
–
Total
1,403,513
398,068
(1,141,738)
(659,843)
–
–
FAIR VALUE OF PERFORMANCE RIGHTS ISSUED
The assessed fair value at issue date of all performance rights is set out above. The fair value at issue date is determined
based on the five-day volume weighted average share price prior to issue date.
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 91
Notes to the Financial Statements
31. Share-based payments (cont)
(b) Employee Share Plan
The Group introduced the Collection House Limited Exempt Employee Share Plan, providing eligible employees
with an opportunity to acquire a beneficial ownership of shares in the Company. The Plan is administered by
CPU Share Plans Pty Limited. This Trust is consolidated in accordance with Note 1 (b) and Note 29.
All Australian and New Zealand resident employees were entitled to participate in the Plan subject to meeting certain
eligibility criteria. Employees eligible to participate in the Group’s Performance Rights Plans detailed at (a) above where
not eligible to participate in the Plan. Eligible employees may elect not to participate in the Plan.
Shares issued by the Trust to employees are acquired on-market prior to issue. Shares held by the Trust and not
yet issued to employees at the end of the reporting period are shown as treasury shares in the financial statements
(refer Note 21).
Under the Plan, eligible employees may be granted up to $1,000 worth of fully paid ordinary shares in Collection House
Limited annually for no cash consideration. The number of shares issued to participants is the offer amount divided by
the average price of the shares acquired on the Australian Securities Exchange during the on-market purchase period.
The shares are recognised at the closing share price on the grant date, as an issue of treasury shares, and as part of
employee benefit costs in the period the shares are granted.
Shares issued under the scheme may not be sold until the earlier of three years after issue, or cessation of employment
by the Group. In all other respects, shares rank equally with other fully paid ordinary shares on issue.
There were no shares granted to participating employees during the financial year (2020: 327,980 units granted on
30 September 2019 with a trade price and fair value at grant date of $1.27).
(c) Expenses arising from share-based payment transactions
Total expenses arising from share-based payment transactions recognised during the period as part of employee
benefit expense were as follows:
CONSOLIDATED
2021
$’000
2020
$’000
Performance rights plan
–
(271)
Deferred shares – CEO short-term incentive
–
(30)
Employee share plan
–
196
Total expenses arising from share-based payment transactions
–
(105)
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
92 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
32. Cash flow information
(a) Reconciliation of profit after income tax to net cash inflow from operating activities
CONSOLIDATED
2021
$’000
2020
$’000
Profit for the year
(31,990)
(145,070)
Depreciation and amortisation
9,457
10,409
PDL Asset Impairment
–
238,890
ROU Asset Impairment
2,612
–
Amortisation of purchase debt ledgers
19,345
28,793
Non-cash employee benefits expense – share-based payments
–
(105)
JobKeeper accrued receipts
2,817
(2,817)
Provision for doubtful debts
(37)
93
Other non-cash expenses
4,697
1,378
Lease Interest
1,662
1,942
Borrowing costs
581
1,351
Interest paid
4,705
7,559
Change in operating assets and liabilities
(Increase)/decrease in trade debtors and bills of exchange
1,570
1,115
(Increase)/decrease in sundry debtors
(2,637)
450
(Increase)/decrease in current tax asset
(7,104)
(9,165)
(Increase)/decrease in other non-current assets
195
281
Increase/(decrease) in trade creditors
(2,384)
(219)
Increase/(decrease) in sundry creditors and accruals
(1,766)
(7,015)
(Increase)/decrease in deferred tax assets
12,248
(62,521)
Net cash inflow (outflow) from operating activities
13,971
65,349
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 93
32. Cash flow information (cont)
(b) Reconciliation of Liabilities arising from financing activities
CONTRIBUTED
EQUITY
$’000
LEASE
LIABILITIES
$’000
OTHER FINANCIAL
LIABILITIES(I)
$’000
BORROWINGS
$’000
TOTAL
$’000
As at 30 June 2019
116,413
5,625
1,365
210,600
334,003
Cash flows
1,256
(5,707)
(732)
4,254
(929)
AASB 16: Initial recognition (ii)
–
37,648
–
–
37,648
Other changes (iii)
1,898
–
–
3
1,901
As at 30 June 2020
119,567
37,566
633
214,857
372,623
As at 1 July 2020
119,567
37,566
633
214,857
372,623
Cash flows
–
(6,251)
710
(155,916)
(161,457)
Lease derecognised
–
(1,171)
–
–
(1,171)
Other changes (iii)
122
–
2
2,211
2,335
As at 30 June 2021
119,689
30,144
1,345
61,152
212,330
(i) Other financial liabilities excludes lease liabilities
(ii) The disclosure note is prepared in conjunction with AASB 16 transition adjustment to disclose the non-cash adjustment within the financing activities.
(iii) Other changes in other financial liabilities and borrowings include accrued interest expense which will be presented as financing cash flows in the
statement of cash flows when paid. Other changes in Ordinary shares represents the transfer to issued shares from options reserve due to the vesting of
performance rights.
33. Events occurring after the reporting period
No matter or circumstance has arisen since 30 June 2021 up until the date of this report that has significantly affected, or
may significantly affect:
• the Group’s operations in future financial years, or
• the results of those operations in future financial years, or
• the Group’s state of affairs in future financial years.
FOR THE YEAR ENDED 30 JUNE 2021
94 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
In the directors’ opinion:
(a) the financial statements and notes set out on
pages 39 to 93 are in accordance with the
Corporations Act 2001, including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements, and
(ii) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2021 and of its performance
for the financial year ended on that date,
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable, and
Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by
the International Accounting Standards Board.
The directors have been given the declarations by the chief executive officer and chief financial officer required by section
295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the directors.
LEIGH BERKLEY
CHAIRMAN
Coffs Harbour
27 August 2021
Directors’ Declaration
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 95
Independent Auditor’s Report
To the shareholders of Collection House Limited
Report on the audit of the Financial Report
Opinion
We have audited the Financial Report of Collection
House Limited (the Company).
In our opinion, the accompanying Financial Report of
the Company is in accordance with the Corporations
Act 2001, including:
•
giving a true and fair view of the Group's
financial position as at 30 June 2021 and of its
financial performance for the year ended on that
date; and
•
complying with Australian Accounting Standards
and the Corporations Regulations 2001.
The Financial Report comprises:
•
Consolidated Balance Sheet as at 30 June 2021;
•
Consolidated Income Statement, Consolidated
Statement
of
Comprehensive
Income,
Consolidated Statement of Changes in Equity,
and Consolidated Statement of Cash Flows for
the year then ended;
•
Notes including a summary of significant
accounting policies;
•
Directors' Declaration.
The Group consists of the Company and the entities
it controlled at the year-end or from time to time
during the financial year.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of
the Financial Report section of our report.
We are independent of the Group in accordance with the Corporations Act 2001 and the ethical requirements of
the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants
(including Independence Standards) (the Code) that are relevant to our audit of the Financial Report in Australia.
We have fulfilled our other ethical responsibilities in accordance with the Code.
Material uncertainty related to going concern
We draw attention to Note 1(a)(v) “Basis of preparation – Going concern” in the Financial Report. The conditions
disclosed in Note 1(a)(v) indicate a material uncertainty exists that may cast significant doubt on the Group’s ability
to continue as a going concern and, therefore, whether it will realise its assets and discharge its liabilities in the
normal course of business, and at the amounts stated in the Financial Report. Our opinion is not modified in
respect of this matter.
In concluding there is a material uncertainty related to going concern we evaluated the extent of uncertainty
regarding events or conditions casting significant doubt in the Group’s assessment of going concern. Our
approach to this involved:
•
Evaluating the feasibility, quantum and timing of the Group’s plans to manage business performance and
liquidity and maintain compliance with relevant financial covenants imposed by the Group’s lenders, to
address going concern;
•
Assessing the Group’s cash flow forecasts for incorporation of the Group’s operations and plans to address
going concern, in particular the potential for future impacts on the Group from the uncertain economic
conditions resulting from COVID-19;
©2021 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms
affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG
name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability
limited by a scheme approved under Professional Standards Legislation.
96 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
•
Determining the completeness of the Group’s going concern disclosures for the principle matters casting
significant doubt on the Group’s ability to continue as a going concern, the Group’s plans to address these
matters, and the material uncertainty.
In addition to the matter described in the Material uncertainty related to going concern section, we have
determined the matters described below to be the Key Audit Matters:
•
Recoverability of the Deferred Tax Asset
•
Valuation of the Purchased Debt Ledger portfolio
Key Audit Matters
Key Audit Matters are those matters that, in our professional judgement, were of most significance in our audit
of the Financial Report of the current period.
These matters were addressed in the context of our audit of the Financial Report as a whole, and in forming our
opinion thereon, and we do not provide a separate opinion on this matter.
Recoverability of the Deferred Tax Asset ($58,407,000)
Refer to Note 7 and 19 to the Financial Report
The key audit matter
How the matter was addressed in our audit
The Group has recognised a deferred tax asset of
$52 million as at 30 June 2021. This includes tax
losses of $46m arising following the sale of the
Australian PDL portfolio in December 2020.
Australian Accounting Standards require deferred tax
assets to be recognised only to the extent that it is
probable that sufficient taxable profits will be
generated in the foreseeable future in order for the
benefits of the deferred tax assets to be realised.
These benefits are realised by reducing tax payable
on future taxable profits.
We consider this a key audit matter due to the
quantum of the deferred tax asset and due to the
significant judgement required to assess whether
there will be sufficient future taxable profits to utilise
the tax benefit.
We performed the following procedures:
•
Assessed the Group’s forecasted profits over the
relevant utilisation period and evaluated whether
the forecasts were consistent with the approved
budget and if they were appropriately adjusted for
differences between accounting and taxable
profits.
•
Compared prior forecasted profits to actual results
to assess the Group’s ability to forecast.
•
Performed sensitivity analysis using a range of
alternative growth rate assumptions to those used
in the forecast of future profits.
•
Tested mathematical accuracy and reperformed
the calculations of the deferred tax asset balance.
Valuation of the Purchased Debt Ledger portfolio ($12,881,000)
Refer to Note 10 to the Financial Report
The key audit matter
How the matter was addressed in our audit
A key audit matter was the assessment of the
Purchased Debt Ledgers (PDL) portfolio recognised
by the Group as:
•
the PDLs are significant to the financial position
of the Group and are the driver of financial
results
•
the PDLs consists of a portfolio of credit-
impaired
receivables,
attracting
greater
variability in risks of recovery given their nature
•
accounting for these PDLs using AASB 9
Financial Instruments (AASB 9) is complex and
multi-layered.
Starting
with
the
Group
Our audit procedures included:
•
Understanding key internal controls in the debt
collection process, including those in the collection
call centre process, valuation and monitoring
processes.
•
Checking the mathematical accuracy of the PDL
valuation models.
•
Understanding the Group’s collection strategy and
assessing the consistency of changes made to that
strategy as to their incorporation into the PDL
valuation models.
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 97
Other Information is financial and non-financial information in Collection House Limited’s annual reporting which
is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the Other
Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an
audit opinion or any form of assurance conclusion thereon, with the exception of the Remuneration Report and
our related assurance opinion.
In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing
so, we consider whether the Other Information is materially inconsistent with the Financial Report or our
knowledge obtained in the audit, or otherwise appears to be materially misstated.
We are required to report if we conclude that there is a material misstatement of this Other Information and based
on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s
Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors are responsible for:
•
preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting
Standards and the Corporations Act 2001
•
implementing necessary internal control to enable the preparation of a Financial Report that gives a true and
fair view and is free from material misstatement, whether due to fraud or error
estimating future cash flows and their Effective
Interest Rate (EIR), we particularly focused on
estimation of future cash collections, their
receipt and timing. This is the basis for layering
assessments of lifetime expected credit losses
(ECL)
to
measure
any
in-reporting
year
favourable changes, as an impairment gain, or
unfavourable, as impairment losses, and use of
a relevant discount rate. These are complicated
in nature and vary according to conditions and
risks relevant.
•
The impact of the COVID-19 pandemic on
customers is unprecedented, challenging the
role of previous patterns of cash collections as a
proxy for future predicted behaviour. The rapidly
changing impact of the health crisis, along with
government and business relief and stimulus
arrangements, increase the risk in estimations,
widening the possible outcomes.
These features resulted in significant audit effort, in
particular regarding the key assumptions, and we
involved our credit risk modelling specialists to
supplement our senior audit team members when
assessing this Key Audit Matter.
•
Challenging key assumptions used by the Group in
determining the value of the PDL portfolio.
Our challenge of key assumptions included:
•
Evaluating the accuracy of previous estimates by
the Group, including debt collection forecasting,
credit-adjusted
effective
interest
rate,
and
estimated PDL life, when compared to actual
historical data;
•
challenging judgements and assumptions applied
with respect to estimated future cash collections
and ultimate lifetime recoveries, against current
experience of constrained economic conditions and
the impact of COVID-19 on actual cash collections.;
•
assessing out of model adjustments applied by
Group to the PDL net present value by using our
knowledge of the industry, constrained economic
condition and impact of COVID-19 on cash
collections.
•
Assessing the accuracy of underlying data used
within the model, for a sample of accounts we
tested their classification type and total amount
owed within PDL model to the underlying
documentation of the customer, such as account
history and collections characteristics;
•
Assessing the appropriateness of the Group’s
disclosures in the financial reports using our
understanding obtained from our testing against
the requirement of the accounting standards.
Other Information
98 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
•
assessing the Group and Company's ability to continue as a going concern and whether the use of the going
concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless they either intend to liquidate the Group and
Company or to cease operations or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from material
misstatement, whether due to fraud or error; and
•
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with Australian Auditing Standards will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of this Financial
Report.
A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and
Assurance Standards Board website at: https://www.auasb.gov.au/admin/file/content102/c3/ar1_2020.pdf. This
description forms part of our Auditor’s Report.
Report on the Remuneration Report
Opinion
In our opinion, the Remuneration
Report of Collection House Limited
for the year ended 30 June 2021,
complies with Section 300A of the
Corporations Act 2001.
Directors’ responsibilities
The Directors of the Company are responsible for the preparation and
presentation of the Remuneration Report in accordance with Section
300A of the Corporations Act 2001.
Our responsibilities
We have audited Sections A to J of the Remuneration Report which is
contained in the Directors’ report for the year ended 30 June 2021.
Our responsibility is to express an opinion on the Remuneration Report,
based on our audit conducted in accordance with Australian Auditing
Standards.
KPMG
Ben Flaherty
Partner
Brisbane
27 August 2021
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 99
Shareholder Information
The shareholder information set out below was applicable as at 13 September 2021.
A. DISTRIBUTION OF EQUITY SECURITIES
Analysis of numbers of equity security holders by size of holding:
CLASS OF EQUITY SECURITY
ORDINARY SHARES
HOLDERS
SHARES
1 - 1,000
3,131
1,788,243
1,001 - 5,000
5,609
15,468,514
5,001 - 10,000
2,045
15,456,840
10,001 - 100,000
2,019
52,589,376
100,001 and over
143
56,645,189
Total
12,947
141,948,162
There were 6,670 holders of less than a marketable parcel of ordinary shares.
B. EQUITY SECURITY HOLDERS
TWENTY LARGEST QUOTED EQUITY SECURITY HOLDERS
The names of the twenty largest holders of quoted equity securities are listed below:
NAME
SHARES
% OF ISSUED CAPITAL
1.
Ingot Capital Investments Pty Ltd
10,063,278
7.09
2.
Citicorp Nominees Pty Limited
5,995,048
4.22
3.
Mr Frederick Benjamin Warmbrand (FB & LJ Warmbrand Super A/C)
2,870,747
2.02
4.
HSBC Custody Nominees (Australia) Limited
2,081,988
1.47
5.
Mrs Lilian Jeanette Warmbrand
1,357,538
0.96
6.
Mr Joseph Miro Vucetic + Ms Clara gala
1,150,000
0.81
7.
Durbin Superannuation Pty Ltd (Durbin Family S Fund A/C)
1,094,492
0.77
8.
JP Morgan Nominees Australia Pty Limited
1,080,145
0.76
9.
HSBC Custody Nominees (Australia) Limited – A/C 2
941,446
0.66
10. BNP Paribas Nominees Pty Ltd (DRP)
941.227
0.66
11.
BNP Paribas Nominees Pty Ltd ACF CLEARSTREAM
894,577
0.63
12. Neweconomy com au Nominees Pty Limited <900 Account>
825,741
0.58
13.
Kemp SMSF Pty Ltd (Kemp Super Fund A/C)
700,000
0.49
14.
Merrill Lynch (Australia) Nominees Pty Limited
583,983
0.41
15. Mr Tyron Hyde + Ms Sandra Radice
500,000
0.35
16. McNeil Nominees Pty Limited
500,000
0.35
17.
Mr Jason Mark Screen
497,000
0.35
18. DA ADMIN PTY LTD
434,000
0.31
19.
Super Smart Investments Pty Ltd
430,000
0.30
20. Hooper Taxation Services Pty Ltd
407,937
0.29
Total
33,349,197
23.49
FOR THE YEAR ENDED 30 JUNE 2021
100 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
UNQUOTED EQUITY SECURITIES
Details of these Performance Rights are set out at note 31 of the financial statements.
EXERCISE
PRICE
BALANCE
AT START OF
THE YEAR
GRANTED
DURING
THE YEAR
VESTED
DURING
THE YEAR
LAPSED
DURING
THE YEAR
BALANCE
AT END OF
THE YEAR
VESTED AND
ISSUABLE
AT THE END
OF THE YEAR
EFFECTIVE DATE
EXPIRY DATE
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
NUMBER
COMPANY – 2021
–
–
–
–
–
–
Total
–
–
–
–
–
–
COMPANY – 2020
1 July 2016
30 September 2019
Nil
1,141,738
–
(1,141,738)
–
–
–
1 July 2017
30 September 2020
Nil
261,775
–
(261,775)
–
–
1 July 2019
30 September 2021
Nil
–
398,068
–
(398,068)
–
–
Total
1,403,513
398,068
(1,141,738)
(659,843)
–
–
RESTRICTED SECURITIES
All issued shares in Collection House Limited are quoted on the ASX and there are no shares subject to escrow or
other regulated restrictions.
C. SUBSTANTIAL HOLDERS
NAME
SHARES
% OF ISSUED CAPITAL
Ingot Capital Investments Pty Ltd
10,063,278
7.09
D. VOTING RIGHTS
The voting rights attaching to each class of equity securities are set out below:
(A) ORDINARY SHARES
On a show of hands, every member present at a meeting in person or by proxy shall have one vote and upon a poll
each share shall have one vote.
(B) PERFORMANCE RIGHTS
No voting rights.
(C) DEFERRED SHARES
No voting rights.
Shareholder Information
FOR THE YEAR ENDED 30 JUNE 2021
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 101
ANNUAL REPORT 2021 COLLECTION HOUSE LIMITED 101
Directors
Leigh Berkley
Chairman (Non-Executive)
Michael Knox
Director (Non-Executive)
Sandra Birkensleigh
Director (Non-Executive)
Catherine McDowell
Director (Non-Executive)
Company Secretary
Jonathon Idas
Executive Leadership Team
Doug McAlpine
Chief Executive Officer
Company Secretary
(resigned 10 November 2020)
Peter Gunn
Chief Financial Officer
(appointed 1 July 2021)
Jonathan Idas
Chief Legal Officer
Company Secretary
(appointed 10 November 2020)
Anand Adusumilli
Chief Data Scientist
Denica Saunders
Chief Operating Officer
Nathan Johnston
Chief Technology Officer
Investor and Client Presentation
The Group’s latest investor and client presentation is
available at www.collectionhouse.com.au
Main contact
Jonathon Idas
Company Secretary
T:
+61 2 9220 0213
E:
Jonathon.Idas@collectionhouse.com.au
Principal registered office in Australia
Level 12, 100 Skyring Terrace
Newstead QLD 4006
T:
+61 7 3292 1000
F:
+61 7 3832 0222
W: www.collectionhouse.com.au
Postal address
PO Box 2247
Fortitude Valley BC QLD 4006
Share register
Computershare Investor Services Pty Ltd
GPO Box 2975 Melbourne VIC 3000
T:
1300 850 505
F:
+61 7 3237 2152
W: www.computershare.com.au
Auditor
KPMG
71 Eagle Street
Brisbane QLD 4000
Stock exchange listing
Collection House Limited shares are listed on the
Australia Securities Exchange (ASX). The home
exchange is Sydney.
ASX code
CLH
Corporate Directory
FOR THE YEAR ENDED 30 JUNE 2021
Notes to the Financial Statements
102 COLLECTION HOUSE LIMITED ANNUAL REPORT 2021
Collection House Group
Level 12, 100 Skyring Terrace
Newstead QLD 4006
T:
+61 7 3292 1000
www.collectionhouse.com.au