We Introduce You

The Money Debt and Credit group (MDCG) started to trade on the stock market today. The organisation has a capitalisation of £10million and raised £3million (gross) through its recent flotation.

This again increases the number of listed companies dealing in IVAs and it will be interesting to see what happens to the industry in the coming months. As you may have heard, the various government bodies have said they will not regulate the market for now and this has led to a self-regulatory body being formed.

Being wary that the dramatic increase in IVAs is increasing their write offs, the banks are being very vocal about the industry and the IVA industry is ping-ponging the comments back by saying the banks should lend more responsibly in the first place.

As most of the companies involved in IVAs are pretty small fry, it is an absolute certainty that there will be some industry consolidation in the next few months.

For your interest, I’ve listed out all the LSE companies I could find dealing in IVAs and I’ve attempted to add a rough percentage of how much they say their turnover has increased in the last reporting period and also included a listing date. Some of the businesses deal purely in IVAs, whereas others complement them by dealing in things like Secured Loans. You can see from the list that nearly all of them were floated quite recently.

Debts.co.uk (DETS) - Listed May 2006 - turnover up 79.3%
Accuma Group PLC (ACG) - Listed March 2006 - turnover up 250%
Debt Free Direct (DFD) - Listed December 2002 - turnover up 91% (Interims)
Debtmatters Group (DEBT) - Listed June 2005 - 465% (Interims)
Cleardebt Group PLC (CLEA) - Listed February 2006 - difficult to establish turnover increase, but impressive month on month growth in IVAs. Cleardebt was renamed from Carrwood PLC.
Invocas Group PLC (INVO) - March 2006 - 50% increase (Interims). Deals in Protected Trust Deeds (Scottish equivilant of IVAs)
Compass Finance Group PLC to rename to the Debt Advisor Group. Recently entered IVA market through an acquisition earlier this year.

This morning Debmatters, who recently reported a good set of interims, announced a boardroom change. Jonathan Timmis joins on January 2 as Technical Director on the Operations Board.

Jonathan is a licensed insolvency practitioner and has held several positions within the industry including roles at Lathams as well as Ratcliffe & Co.

Ges Ratcliffe, the Debtmatters CEO, has previous experience of working with Timmis at Ratcliffe and Co., which was a predecessor to Debtmatters.

In this mornings announcement Debmatters say, “Jonathan, who joins from his own successful Lancaster based practice, which he founded in 1999, will bring with him a portfolio of cases as well five experienced members of staff who will join Debtmatters’ Corporate and Commercial Division.”

So it appears on the face of it, Timmis must be getting more out of the deal than merely a place on the board.

Debmatters entered the Secured Loans market through its purchase of Loanmakers in June and hopes to grow the cross referral of IVAs and secured loans between the two businesses.

In another change, Elephant Loans and Mortgages, who reported yesterday, announced the appointment of Maria Giambrione as Company Secretary. Elephant say Maria will be responsible for the accounts and administrative functions of the Group.

She replaces, David Gammond, who recently worked on the IVA operating subsidiary DebtSmashers, and has handed over his executive responsibilities but will be responsible on a non-executive basis for overseeing corporate strategy and specific projects.

Elephant Loans and Mortgages (ELEP) has reported its Interims this morning and from a first glance it looks like they are putting everything in place for future growth.

Elephant is a packager of Secured Loans and mortgages and following in the ever-growing trend is launching an IVA division called Debtsmashers.

Again, contrary to the problems reported by Compass, Elephant reports a 29% growth in commission income and a 75% increase in the number of agreements packaged for onward lenders.

Despite turnover going up, the group has made a substantial loss brought about by a dramatic increase in administration expenses (800k up to 1.5m). Elephant points out this is due to opening a further four branches, bringing its total number to seven, and recruiting additional staff.

Elephant feels that having direct to customer branches improves conversion rates and, to be honest, it will have to improve it significantly to cover the overheads and staff costs. It seems a strange strategy for Elephant to take on the big boys with a branch network and I guess only time will tell if they can pull it off.

Elephant says it has also signed up more affiliate partners and improved its commission rates with lenders. In October it raised nearly £1million with a share placing and says this will be spent on growing Debtsmashers.

Elephant was only admitted to Aim late last year and I’d rate it has a reasonably high risk share.