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  • BY: Andrew Hore |
  • POSTED: 09/10/2007 | is not immune to the problems of the IVA market but it still managed to grow profits last year. 

The number of IVAs being passed by creditors is falling and fee levels are also heading downwards. According to chief executive Paul Carter “the most likely scenario concerning an outline fee structure appears to be one with fees based upon percentage of realisations coupled with an extended timescale over which fees will be paid”. That could hit cash flow.

The acquisition of Adie Financial solutions, which takes into the Scottish market, may help to offset some of the problems in England and Wales.

Turnover jumped from £6.1m (pro forma) to £11.6m in the year to July 2007. Profits moved ahead from £2.1m to £3.4m. has £1.2m in the bank but the cash outflow last year was more than £3m. That is because initial revenues are recognised before fees are paid. As growth in IVAs slows cash should be generated because there will be more mature IVAs where the initial fee has been fully paid and monthly fees are recognised as they are paid.

The group remains profitable but it doesn’t appear likely that last year’s profit levels can be sustained in the short-term. Marketing costs are down significantly and business processes streamlined.

At 53.5p, the shares are trading on four times historic earnings but it is difficult to assess what earnings can be achieved this year.

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