Collection House AGM turns into boardroom execution: chairman Kerry Daly and audit head Philip Hennessy ousted

TWO Queensland business heavyweights have been ousted after this year’s most dramatic annual general meeting, which ended with a hug after the killer blows.

Kerry Daly was ousted as Collection House chairman. Picture: Jono Searle

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THE chairman of debt chasing agency Collection House has been dumped in a shareholder revolt, led by a disgruntled investor and long-time business associate who hugged him after the killing blow.

In a rare event for a stockmarket-listed company, enough shareholder votes were accumulated to also oust the head of Brisbane-based Collection House’s audit committee.

The protest votes of roughly 53 per cent and 63 per cent, respectively, meant chairman Kerry Daly (pictured) and director Philip Hennessy were out of a job at the end of Queensland’s most dramatic annual general meeting this year.

Both are weighty figures in business: Mr Daly’s resume includes heading The Rock building society while Mr Hennessy was a former Queensland chairman of KPMG.

“The shareholders have decided. You move on,” Mr Hennessy told The Courier-Mail.

“This is shareholders exercising their right,” Mr Daly said. “I’ve been a public company director every day of my life for 26 years … I never thought I’d be tossed off a board for complying with the accounting standards. I mean we’ve made corporate history.”

Tamawood Homes founder Lev Mizikovsky led a successful push against the two directors.

Accounting standards and Mr Hennessy’s KPMG tie were key factors in Tuesday’s ousting. They were highlighted by Lev Mizikovsky, founder of home-builder Tamawood and a former Collection House director, who also owns 12 per cent of the debt-chasing company.

He led the successful push against the two directors. He and Mr Daly had been associates for more than a decade – Mr Daly was even a former Tamawood chairman, and said afterwards that Mr Mizikovsky had shook his hand several times and hugged him.

“It’s disappointing … in that’s where it ends, with directors losing their jobs,” Mr Mizikovsky said. “(But) sometimes you have no choices. Just ’cause you like someone ...”

Mr Mizikovsky argued a potential conflict of interest lay in Mr Hennessy’s past at KPMG and the fact KPMG was now Collection House’s auditor.

Collection House had denied any conflict existed and the auditor, KPMG’s Scott Guse, gave an unprecedented speech at the AGM detailing how problems were to be avoided.

This included KPMG picking an auditor who had not worked closely with Mr Hennessy and KPMG’s Queensland chairman Rob Jones reviewing key audit judgments, Mr Guse said.

SOFTWARE CONCERNS

Mr Mizikovsky had also zeroed in on accounting treatments of software. In a previous notice to shareholders, he had questioned whether millions of dollars in software had been appropriately capitalised instead of charged as in expense against profits. In theory, profits can be artificially inflated if costs are incorrectly capitalised.

“There’s nothing there that indicated that the value of software was ever assessed,” Mr Mizikovsky said yesterday.

But Mr Guse told the meeting that assessments about software had included testing items such as whether employment costs were appropriately recorded, which included checking timesheets or manager sign-offs.

Collection House director Leigh Berkley also said he conducted a review of software, looking at issues including functionality for the business, to satisfy himself about valuation standards.

Mr Mizikovsky later maintained there was an issue with the software. He said he would consider his long-term holding of Collection House shares, but added the “future’s bright”.

Collection House shares have been battered by a series of downgrades since 2015, falling from almost $2.40 in that year to $1.35 yesterday.

During the meeting, via his representative Brad Vinning, Mr Mizikovsky asked about the timing of share sales by former managing director Matt Thomas and others connected with the company.

Mr Daly pointed out those shares were sold very soon after record profit results for fiscal 2015 were released, and within a company-approved share-trading window.

The shares were sold in late August and Collection House gave full-year profit guidance in October 23 that year that was below some investor expectations, and earnings were downgraded in February.

Mr Thomas told The Courier-Mail the shares had been sold based on financial advice at the time and were not sold with any knowledge of profits declining. He added he had actually held a greater number of shares after that stock sale, because a bonus had triggered the awarding of even more shares.