Debt management firm ClearDebt has today posted a revenue rise of 18% to £9.2m, despite “disappointing” numbers of individual voluntary agreements (IVAs) in the second half of 2012.
In its financial results statement for the year to 30 June 2012, the company announced pre-tax profits of £834,758, up from £227,219 in 2011.
ClearDebt revealed that the number of new IVAs fell from 1,601 in 2011 to 1,459 in 2012, and that average income from new IVAs is also down.
David Mond, chief executive of the company, 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.”
The company blamed declining disposable incomes among consumers and “some resistance” to IVAs by certain creditors.
The number of new IVAs dropped 34% in the third quarter to 273 from 411 in the same period the previous year.
ClearDebt posted growth in revenue from its financial consultancy related to the IVA business, but one-off items mean that it is not expected to continue at current levels and that it could drop to lower levels than have previously been reported.
Its debt management plan (DMP) subsidiary Abacus returned to growth in the 2012 financial year, delivering a “pleasing” profit in the period as DMP client numbers increased month-on-month from January.
As at 30 June 2012, the total number of DMPs generating income was 6,566, up from 5,761 in 2011.
The company said that gross profit across the firm increased 18% to £4.6m for the year, from £3.9m the previous year.
Earnings before interest, tax, depreciation and amortisation (EBITDA) increased modestly to £2.7m from £2.2m in the prior year.
ClearDebt’s pre-paid MasterCard ClearCash is yet to reach a break even position due to its decision in December 2011 to switch service providers, which led to increased losses as costs were duplicated while the old card was wound down.