Debtmatters Share Discussion Threads

[pork belly] 04/10/2007 20:17

So DEBT may well go the same way as one of the Debt companies (TDAG) has already gone this year - BUST !

Especially as they can no longer offer IVA's profitably. Who's going to buy them with this admission ?

EXTREMELY RISKY.

[pork belly] 04/10/2007 20:15

Shares Magazine,28 Jun 07

Debt advice sector facing almost certain collapse
TDAG DETS ACG DFD DEBT
Published date:Thursday, June 28, 2007

Ameltdown of the debt advice sector is expected this year with most IVA specialists being taken over or going bust. Profits have been slashed by a vicious pincer movement. On one side the banks and other lenders are demanding much lower fees from the IVA firms or refusing to allow new IVAs to proceed. On the other dozens of new firms have entered the market intensifying competition.

Debtmatters (DEBT:AIM), at its analyst's meeting for its results last week, predicted that only three or four larger players out of more than 30 will still be operating in a year's time. The survivors will be

Debt Free Direct (DFD:AIM) and Debtmatters and a couple of private firms.

If this scenario is correct, it means two other quoted companies – Accuma (ACG:AIM) and Debts.Co.uk (DETS:AIM) – will perish or lose their independence in the wake of Debt Advisor (TDAG:AIM)'s demise.

Its shares were suspended three weeks ago 'pending clarification of its financial position'. Debt Advisor was hoping to be acquired by another IVA group but discussions were abandoned and it was forced to appoint its own insolvency practitioner.

Analysts reckon the IVA sector is fundamentally unsound. The costs of winning new cases and obtaining bank agreements have rocketed, meaning that most companies can no longer make a profit on new cases. Debtmatters expects to have to cut its fees by at least £500 to re-establish good relations with lenders while also having to spend more on advertising for new IVAs.

Shares says: There needs to be a drastic reduction in IVA specialists so acquisition costs are reduced to economic levels.

HOLD Debtmatters, Debt Free Direct

SELL Accuma, Debts.co.uk

[smashingguy] 04/10/2007 19:45

i am setting a 9p target for this company mainly because i expect a goodwill impairment

[mrphil] 04/10/2007 19:45

I presume I am missing something but isn't it the cost of iva's which caused the problem with the creditors in the first place? Surely if DEBT have been charging less than the others then they will be less affected by any ceiling placed on the charges as they wouldn't need to reduce their charges as much?

[ihavenoclue] 04/10/2007 17:57

DEBT's problem isn't a high percentage fail ... just their average revenue from each IVA is considerably lower than DFD and ACG. DEBT average £4,300 where as AVG/DFD average £7,000. That is why DEBT can not manage IVA's profitably.

Welsh .. do you know how much of any profit is down to Loanmakers ?

Regards
IHNC

[welshwiz] 04/10/2007 15:49

I wouldnt say it was a high percentage no.
Actual cash flow would increase because all the costs have been paid up front.
On top of that you have profit from loanmakers and debt management.
A p.e of 5 on Loanmakers alone give you a m/cap of 10 mil
Not exactly rocket science :-)

[hosede] 04/10/2007 15:16

Welsh
Isn't part of the problem that the entire profits from the IVA's have been booked at the beginning? A high percentage of IVA's fail in which case the (monthly) fees stop coming in.

[welshwiz] 04/10/2007 15:10

Ihnc
16.50 was a sale over nms
Run-off is when a company such as Debt close themselves to new business.(iva's in reltion to Debt)
inhc:short ternm 35-40 when the dust has settled

[ihavenoclue] 04/10/2007 15:06

g1 ... to not take on anymore claims/cases and to just follow through on all the claims/cases they currently have.

[g1ll1s] 04/10/2007 14:43

..excuse my ignorance, what is a 'run off'?

[ihavenoclue] 04/10/2007 13:56

welsh .. what is your target price ? I know you are confident but there are good reasons why the share price is currently down here. Fear overtakes fundamentals at times like these.

[ihavenoclue] 04/10/2007 13:53

welsh .. i bought at 16.9p too and topped uop a few more today at 17.55p ... bit risky but what the hell !!

[ihavenoclue] 04/10/2007 13:52

welsh .. what about the 16.50 ?

This kind of thing happened with ACG .. the share price was 18p and i bought at 17.5p ... a few days later they jumped to 35p. Would be nice to see it here.

Regards
IHNC

[welshwiz] 04/10/2007 13:34

17.55 are buy's 17.51 are sells

[welshwiz] 04/10/2007 13:30

same yesterday.
Cheapest i bought was 16.9p and that and couple for 17p and 17.25p showed as sells.

[ihavenoclue] 04/10/2007 13:20

SP is 18p and can now buy for 17.5p so all "sells" around that price are buys.

Still shocked that the share price dropped lower than ACG's

[welshwiz] 04/10/2007 12:22

Ratcliffe paid £1.13 for these in june so would have to pay at least that amount in an mbo if it were before june 2008(12 month ruling)
Numis break up valuation of £1 a share.
Way over-done imho

[welshwiz] 03/10/2007 06:28

ihnc
Debt have paid most of the amount owing for Loanmakers(albeit with the help of rbos)
They paid 10mil straight away and £1 mil cash and 3.83 mil shares(i'm assuming still based on £1.59 price that was agreed upon)
Total consideration was for up to £19 mil over 2 years so my take on it is that the have approx 3 mil to pay next year(based on performance of Loanmakers)in combination cash and equity.
By cutting cost of sales in iva division they could become very cash generative in the short term from the existing live cases (appprox 9000)and along with profit from Loanmakers and debt management nett profit for the next 12 months could be nearly 3 times the current m/cap.
More than happy to be buying at current price.

[ihavenoclue] 02/10/2007 20:09

mikejah - 2 Oct'07 - 13:35 - 2658 of 2670


Wonder if Loanmakers directors will play similar part as Argo has in ACMH.They can get their business back for half what they were paid for it

=======================================================

And how many shareholders would agree to a sale at this price ?

[ihavenoclue] 02/10/2007 20:03

I still don't think it is as clear cut as people say. Loanmasters worth an £15 million on its own ? They didn't even pay that for it last year and still owe most of the payment for it in the first place.

Take away IVA's ... as it looks like that is exactly what is going to happen ... and what is left of DEBT ?

Just a question to look for opinions

Regards
IHNC

[mikejah] 02/10/2007 15:14

In the placing at 113,Ges Ratcliffe put up £750000,difficult to imagine he wont be interested in buying the group back

[welshwiz] 02/10/2007 15:05

Take out cost of sales which is mainly advertising(which they have announced they have done)for 12 months,reduce further overheads i.e re-deployment to other parts of the business(which they have done).Then take the fee's from existing 9000 iva's and profit from loanmakers and debt management and you have a cash cow with pofits of more than 3 times market cap.
Bargain for someone

[mikejah] 02/10/2007 14:52

My £25m was after allowing for debt of £10m,the 2 loan books are already making £5m and synergies should produce at least £1m pa.

[diogenesj] 02/10/2007 14:45

Fusebox, is that you or an impersonator? I don't think we know what the debt position is. It was £8.76m at the last accounts, but since then they have rather cheekily raised £3m at 113p, 'to pay down debt and provide working capital for the debt management division' (or as some might think in the light of the latest statement, to stave off insolvency).

[fuseboxi] 02/10/2007 14:31

what you guys seem to over look is that this outfit had debt of nearly £9m at at March 31st.

So it already has an EV of nearly £15m.