‘Disappointing’ IVA market fails to dent ClearDebt profits

DEBT management firm ClearDebt has reported a sharp rise in sales and earning in the year to June despite a sluggish individual voluntary arrangement (IVA) market.

The Timperley-based group said sales rose 18% to £9.2m while earnings, before interest, tax, depreciation and amortisation (EBITDA) grew 23% to £2.7m. Pre-tax profits jumped from £227,200 to £834,758.

It now has 13,000 clients but said there were “disappointing” numbers of new IVAs in the second half, however this was offset by a stronger performance on the debt management side.

The number of IVAs declined from 1,601 to 1,459, but debt management plans under the control of its debt management arm, Abacus, increased to 6,566 (5,761).

In its full-year results the company said IVAs – where a debtor agrees a repayment schedule with creditors – had plateaued due to, “declining disposable incomes of consumers and some resistance by certain creditors to the solution”.

Chief executive David Mond said: “The group has enjoyed a good year in terms of profitability and cash flow although this has to be tempered by lower numbers of new IVA cases particularly in the second half of the financial year.  

“This is a disappointing result but one that I feel is being mirrored by many in the sector as the IVA market as a whole remains flat at best. Against this we have been successful in generating substantial income from consultancy related to the IVA business, although it is not expected to continue at these levels in the current financial year.”