Troubles lift profit at Debts.co.uk
Debts.co.uk, which specialises in providing individual voluntary arrangements (IVAs) for people struggling to repay loans, has predicted strong growth despite the industry facing a potential increase in regulation.
The company's outlook comes as it reported a 29pc rise in pre-tax profit to £1.3m for the six months to January. Turnover jumped 63pc to £5m. After its insolvency practice moved to new premises in December, the company expects "the second half will see significant growth in terms of the of volume of trading," according to chief executive Paul Carter.
Debts.co.uk has increased its number of insolvency practitioners from four to six and expects to be able to process 500 new IVAs per month. Currently, the group is processing 1,064 IVAs which are expected to be completed within the next 10 weeks to give a run rate of around 300 IVAs a month. As business has increased operating costs almost doubled to £2.5m.
A rocky ride for Debts.co.uk investors
Widespread concern has been raised about the mis-selling of IVAs. Debt management charities claim that in some cases individuals have been sold IVAs when a personal bankruptcy would be more appropriate. They have also accused firms of not spelling out the long-term consequences of an IVA. Some cash receipts by Debts.co.uk have been delayed by lenders involved in each IVA.
The group expects to see more such restrictions when a review by creditors of the IVA process is completed. Mr Carter said: "We expect the outcome of this to become clearer over the next few months and impact more on cash flow rather than overall economic patterns in the IVA market."
Government figures released last month showed a record 107,288 people in England and Wales declared themselves bankrupt or took out an IVA last year. This was a 59pc increase on 2005, when 67,500 people went bust. Debts.co.uk shares rose 3p to 116½p this morning.
Source: telegraph.co.uk 27/03/2007
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