Debtmatters Share Discussion Threads

[quepassa] 07/10/2007 19:45

Sunday Times to-day 7th. October.

A damning article on Debtmatters, from which the following is an extract:-

".........I have warned before that shares in debt advisers are hugely risky. Last week underlined that the IVA market is toxic. Any investor foolish enough to have hung on should get out swiftly."


Read The Sunday Times ( on-line ) for full article.

DYOR.

QP

[ihavenoclue] 06/10/2007 15:51

Australia 10 - 12 England ..... life is good !!!

[pork belly] 05/10/2007 21:09

ihavenoclue

thanks for pointing out the error in my calcs. i have just corrected it. At a P/E of 16, the Loanmaker part of the business would be fairly valued at around 11p, underpinning the business and thus not going bust.

i will phone the company on monday as i have some questions.

[ihavenoclue] 05/10/2007 19:50

pork ... from your own post

"Despite the uncertainty over fee levels, he added, IVAs as an instrument for debt management are here to stay. "IVAs remain a useful halfway house between bankruptcy and an informal debt management plan. Plus, they are part of the Government plan, as the Government has chosen not to change this."

I am not saying that IVA's are the savior of DEBT as it is looking bleak for them in that department. IF the fees can be sorted soon, looking more and more unlikely, then DEBT may have a chance to use it's infrastructure that is in place to profit from the new fees.

We will have to wait and see ... i am unsure of what you are saying though, PB. One post is negative the next is positive. Are you saying you are in two minds ?

Regards
IHNC

[pork belly] 05/10/2007 19:48

Here is the last entry re:IVA's on the BBA website:

13/08/2007
Proposed changes to the Individual Voluntary Arrangement Regime

[pork belly] 05/10/2007 19:44

It is pretty clear from the above that the IVA industry WILL live on post the BBA decision. Once the decision is out and visible revenue can be seen, then the IVA related companies could see a surge.

[ihavenoclue] 05/10/2007 19:43

pork ... so 5p a share ? Market Cap of £1.5m when one part of the company is making a profit of £2m ? Get real !!

[pork belly] 05/10/2007 19:41

Debts.co.uk "buy"

Monday, October 01, 2007 6:54:54 AM ET
Seymour Pierce

LONDON, October 1 - Analyst Derek J Brown of Seymour Pierce maintains his "buy" rating on Debts.co.uk PLC (ticker: D3Z).

In a research note published this morning, the analyst mentions that the company's revenue performance is likely to fall short of the estimates in the event that fee rates are brought down substantially. Investor focus on uncertainties might bring the whole sector under pressure in the short term, the analyst says. Once an agreement is made over fees IVAs are expected to recommence their growth trajectory in the longer term, Seymour Pierce adds.

[pork belly] 05/10/2007 19:39

The Independent

DebtMatters bombshell hits IVA industry
By Esther Shaw
Published: 02 October 2007

Shares in consumer debt advisers plunged yesterday after one of the leading providers of individual voluntary arrangements (IVAs) warned that the fees on offer no longer made the plans profitable.

DebtMatters Group said that creditors such as banks had cut the fees they were prepared to pay for restructuring unmanageable debt repayments to such low levels that IVAs were becoming uneconomic.

The firm warned that there was "continuing uncertainty surrounding the IVA markets", as banks continue to drive down costs. Shares in DebtMatters tumbled 50 per cent yesterday. Fellow IVA provider Debt Free Direct dropped 29 per cent and Debts.co.uk was down 53 per cent.

In contrast to bankruptcy, which wipes out most personal debt save student loans, IVAs ask that people only pay back a portion of their overall debt – usually around 40 per cent. After three to five years, the debts are written off, although the individual's credit record remains stained for six years.

IVAs had enjoyed a boom in recent years. As personal debt spirals, however, lenders are taking a tougher line. Debt management firms have been under pressure for nearly a year due to a dispute over the level of fees creditors pay them for putting together IVAs.

The change of attitude by creditors has undermined investor confidence in the sector, which is waiting for a ruling from a committee led by the British Bankers' Association (BBA). Yesterday, the BBA would only say that it was "tidying up the protocol and getting it signed off".

DebtMatters said IVA case acquisition costs have risen sharply in the face of rising competition, and that IVA conversion rates have worsened due to "hardening creditor attitudes, which have impacted on margins".

Although discussions hosted by the BBA and Insolvency Service had continued, the process "did not provide any firm conclusions on the issues of fees charged by practitioners," DebtMatters added.

"During September, we started to see certain creditors seeking to modify IVA proposals, such that on our cases, average nominee and supervisory fees would be reduced. Should these fee modifications become the norm, we may no longer be able to deliver IVAs profitably," it said.

For the time being, DebtMatters has suspended all direct advertising and said it would scale back its IVA division. It plans a full strategic review that could lead to the company's sale.

The key issue, said analysts, is the uncertainty in the IVA sector, particularly in regard to fee levels. Gerald Farr of Seymour Pierce said the whole industry was suffering from a "lack of visibility on revenues".

"The BBA and Insolvency Service have set up a working group, but have not yet come out with a full-level agreement over fees and practices," Mr Farr said. "The group was set up back in the spring, and we were expecting an outcome by the summer, but things seem to be taking longer than this."

Despite the uncertainty over fee levels, he added, IVAs as an instrument for debt management are here to stay. "IVAs remain a useful halfway house between bankruptcy and an informal debt management plan. Plus, they are part of the Government plan, as the Government has chosen not to change this."

Debt Free Direct, the market leader, said in a statement that IVAs were of "fundamental importance to the UK banking industry and Government policy" and would remain so. "The provision of IVAs and other services to creditors and over-indebted consumers is already a sizeable market and is set to grow in the foreseeable future."

However, it added that there had been a period of transition during the first half of the year – one from which it had not been immune.

[pork belly] 05/10/2007 19:33

and that was the day AFTER they fell to 16.75p.

[pork belly] 05/10/2007 19:32

For those that missed this:

Dow Jones newswire
02/10/2007 00:00 Broker Recommendation


Reiteration of Debtmatters by Shore Capital to "sell".
Shore Capital have given Debtmatters a recommendation of "sell".

[ihavenoclue] 05/10/2007 17:43

Come on Dio ... he is welsh ... you can't expect too much ;-)

[diogenesj] 05/10/2007 16:32

Do you automatically assume that anyone who does not fully share your optimism is an illiterate and innumerate entrant to the ADVFN community, welsh?

I would not normally mention this, but your own spelling of 'innumerate' suggests that the literary education of much of the existing ADVFN community may not have reached a very advanced level. :-)

[welshwiz] 05/10/2007 16:17

Topinfo the former advisor to Greenspan is heading the Bear camp.Surely i should re-consider my position? ;-)
Two major clue's that Debt's demise is not upon us:
1.Directors buying with their own cash
2.Bank allowing them to pay £1 mil in cash to Loanmakers former owners(it is illegal to make payment to one creditor only if they have other creditors and were going bust)
I blame it on the poor education standards of this country that we have such illiterate and inumerate characters entering the community of advfn.

[ihavenoclue] 05/10/2007 14:12

During September we started to see certain creditors seeking to modify IVA
proposals such that on Debtmatters' cases, average nominee and supervisory fees
would be reduced. The impact of these additional changes on the IVA business
could be significant. Should these fee modifications become the norm then we
may no longer be able to deliver IVAs profitably. Consequently, for the moment
the Board has decided to suspend all direct advertising on TV, radio and through
the press. In addition, the IVA division, which has built a significant
infrastructure over the last two years since flotation, will be scaled back,
with staff being redeployed into other areas of the business as appropriate."

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

I feel this part is a warning .. if IVA's become a non-viable option then all that is left is bankruptcy and the banks forcing IVA's hand will end up with even less. There has to be a balance worked out or banks will have killed off IVA companies only to find they end up in a worse situation.

All IMHO
Regards
IHNC

[ihavenoclue] 05/10/2007 14:07

pork belly - 5 Oct'07 - 13:36 - 2707 of 2714


again, this is the death knell statement that will crucify this company:

"Debtmatters said it may no longer be able to deliver its IVA business
profitably if these fee modifications become the norm."

The whole point of a business is to make a profit. If they can no longer operateprofitably then they will either go bust or be bought out. As the iva industry is still in danger of total collapse due to the new fee system being considered then any other companies considering a bid will also go bust leaving nobody to buy them. period.

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

IVA's are one part of DEBT's business ... not all of it as you seem to suggest. You are obviously just trying to deramp.

From RNS :-

"Debt management division

Since its launch in July 2007 the debt management division has performed well.
The initial team of 15 has been increased to 28 by redeployment of staff from
the IVA division. Volumes of enquiries and the conversion rate to debt
management plans are in line with the Boards' expectations and the division, at
this early stage, has made a pleasing start and further progress is anticipated
during the second half.


Loanmakers

The loan broking subsidiary, acquired in June 2006, continues to perform well
and is growing in line with expectations. Relationships with lenders remain
strong and further steady growth is anticipated. New sources of referrals are
being developed and the business is well placed to progress in the second half
of the financial year.


IVA division

In contrast, the continued uncertainty surrounding the IVA markets has been well
documented. IVA case acquisition costs have risen sharply in the face of rising
competition, and IVA conversion rates have worsened due to hardening creditor
attitudes which have impacted on margins.

During the period, discussions hosted by the British Bankers Association and the
Insolvency Service have continued. However, the process did not provide any
firm conclusions on the issue of fees charged by insolvency practitioners and
this has led to well publicised concerns over the future of the industry. These
concerns have precipitated the continued share price weakness in the sector from
which Debtmatters has not been immune.

During September we started to see certain creditors seeking to modify IVA
proposals such that on Debtmatters' cases, average nominee and supervisory fees
would be reduced. The impact of these additional changes on the IVA business
could be significant. Should these fee modifications become the norm then we
may no longer be able to deliver IVAs profitably. Consequently, for the moment
the Board has decided to suspend all direct advertising on TV, radio and through
the press. In addition, the IVA division, which has built a significant
infrastructure over the last two years since flotation, will be scaled back,
with staff being redeployed into other areas of the business as appropriate."

----------------------------------------------------------------------

Only the IVA part of the business is not operating profitably so not going to go bust. Notice the statement where it said it was redeploying staff. It's debt mananagement arm has doubled in 3 months.

Please state ALL the facts and not a one sided view if you want to be taken seriously. The company has taken a large blow but not a killer blow. Daniel Stewart mentioned two alternatives for the company, to be bought out or run-off of IVAs, currently 9000 in system, and continuing with what they currently have elsewhere.

I feel it is a very risky buy at present but can't see the company going bust.

Regards
IHNC

[diogenesj] 05/10/2007 14:03

2111: directors are always optimistic. You know that: they have to be. Most of them (like the Northern Rock directors) don't see the precipice until they fall over it. If they do see it, they may say 'There may be a precipice ahead'. 'May' means 'will' in that context.

[twentyoneeleven] 05/10/2007 14:00

We could say that about a lot of shares though couldn't we PB ... but perhaps some have potential? If the banks continue to refuse to let people off 'lightly' with an IVA and insist on bankruptcy, our debt-based economy is going to collapse, and the couple of hundred pounds I'm down here will pale into insignificance compared to the losses many will incur with tumbling house prices and repossessions aplenty! IMHO!