Collection House Limited

CLH Details

Recently, Collection House Limited (ASX: CLH) has announced that the capitalized software development expenditure (including work in progress) of approximately $2M will be written-off in the company’s FY17 financial accounts. This amount relates to software development activities undertaken in previous reporting periods on modules that have been rendered redundant or no longer in use. Further, CLH has contracted with a reputable external vendor to finalize software development on the incomplete system components. In addition, currently unstated amounts related to existing capitalized computer software development costs may also be required to be written-off. Accordingly, the board has engaged an independent ‘big four’ accounting firm to carry out a forensic audit of the accounting methodology as well as the supporting evidentiary documentation and software development work to justify the $13.4M carrying value of capitalized computer software development costs as at 31 December 2016, and the independent investigation is expected to determine the further action required going forward. The stock has declined 17.9% over the past six months, while it was up 5.9% in the last one year. We give a “Buy” recommendation on the stock at the current market price of $1.16


CLH Daily chart; (Source: Thomson Reuters)

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