Ann: Chairman's Address and MD/CEO's Presentation to AGM, page-19

Colablackandwhite

You raised an interesting point about lower PDL amortisation equating to higher NPAT. Ask who gained, and bingo, you have a conspiracy theory.

In response to a question directed to me in a CCP thread that referred to CLH, I wrote yesterday that CLH might be facing a less than stellar 2016 because it might have forward shifted profits into 2015 by applying a lower than average PDL amortisation factor of 42%, and that 2016 may be when it has to correct this, and that blaming a deteriorating PDL supply situation may just be an excuse. CCP, for instance, usually amortises PDLs at 47%. I also raised the fact that I could not reconcile the rate of EPS growth recorded by CLH given that its ROE and income retention ratios suggest a lower potential for EPS growth.

There could be reasons why 42% amortisation may be valid (e.g., extracted more collections from older PDLs), and reasons why CCP may need to amortise at a higher rate than CLH (CCP may buy crappier PDLs), and it is possible to grow EPS faster than ROE x Retained Earnings if other things change, but as I do not hold CLH, I was not motivated to investigating further. Maybe those with skin in the game have more incentive to dig deeper.