Surprising that no existing thread on Debtmatters (DEBT). Big run up this year and Shares are expecting more to come. Been watching for a while but recent news of accelrating expansion has encouraged me on board.

DEBT is a relative newcomer to the market: revenue up 230% to 2.44 at interims to Sept 2005 and pbt up 530% to 818K. In comparison DFD turnover to October 2005 (interims) more than doubled to 6.4m with pbt of 1.86m. DEBT achieved 200 IVA's for the first time in September: this became 344 in January and 534 in March. DFD has approaching 20% of the market which appears to be expanding at about the rate achieved by DFD as their share is constant. From this I deduce that DEBT has a way to go at its exceptional current growth rate. OK a pe around 90 appears high but two years could bring it to 30 and then 10.

From the charts there is terrific momentum in the climb. It may be that we have had two legs of a three-legged climb. Best to be on board for the journey!

Eric

sd: thanks again. How do you see ACG in comparison? Growth appears even quicker than DEBT. One advantage for ACG is that they seem to have a wider range of offerings whereas DEBT appear to concentrate on IVAs. Thus they will attract people who just want their debt managed better than they can do themselves. Whereas DEBT appear to take credit up front with a Trust Fund invovled, ACG have a forward flow of payments. Do you agree this analysis? cap somewhat lower although recent rise even stronger than DFD and DEBT.

Eric

eric - difficult to tell at first glance from first profitable interims compared to full year for DFD and DEBT. However, it seems their PE, margins and ROCE are not as favourable as DEBT, although they seem to have the same markjet share (12%). They could be growing even faster than DEBT - difficult to tell from a loss-making 2005 year to a first profitable year. Full year revenues could be 11.4m up 300% on 2005.

Their different business model - more services than just IVA's and referral as a means of acquiring clients instead of just advertising - is not so easy tom compare without a full set of accounts to go on. I suspect their other activities are much lower margined than IVA business whcih they claim is 60% gross margin. However their overall gross margin is only 35% H1 2006.

Their chart shows an interesting comparison between all three. Starting at 0% 1 year ago, DFD ends up at 200%, ACG at 300% and DEBT at 550%. So DEBT clearly has the greatest momentum and relative strength. By contrast AIM-allshare index ends at 30% and General Financial sector at about 80%. Over 2 years the respective figures are 180%, 180%, 370%, 10% and 60% - again DEBT the outright winner.

I remain happy with DEBT especially as it regained my purchase price after a somewhat sulky performance immedaitely after I bought!

sd

This sector particularly hard hit in market fall-out, presumably because of previous increases and therefore nuimber of investors who want to pocket their profits. Will have to consider reducing my holding if market doesn't recover tomorrow - I suspect many are in same position, partic ularly those who utilise derivatives.

Eric

One word of caution ,these are a high beta stock and since i bought them in August they have been volatile, when the market dropped they seemed to drop like a stone,and when it turned they went up in leaps and bounds ,I sold a good part of my holding recently so am not too bothered ,however i wouldn't be surprised to see them bounce right back.
I don't think this sector was hit any harder than other shares i am in or watching ,most took a battering today,,here.s for a quick recovery.

Eric - it's not the sector which fell 4-5% today, it's DEBT which fell 8% - don't know why it's more volatile - maybe it has fewer insti's holding and more PI's/daytraders. Hope jimmyb's right about beta working both ways!

sd

In fact later trading was positive so this seems to bear out your comments, jimmy and sd. Volume not that big so seems like part of a general mark-down.

Eric

In my opinion this got off lightly today ,i expected to see it down a lot more than 1p ..

As i thought when i looked last night ,it had got off lightly ,not today though ,,if the market turns this will turn sharply with it ,my only concern is that this is more than just a correction ,i suppose the next few weeks will tell .

Jimmy: I suspect it is just a greater level of volatility probably arising from the proportion of hot money in the share and possibly also shorting it. Was shaken out at 304p as I held the shares in a cfd and couldn't risk a further fall. Convinced on the fundamentals but it is cioping wioth the market! How is my doggy friend taking it?

Eric

Sorry to hear that Eric ,this is not normal circumstances ,since i was in,, it has bounced around but always climbed ,,i stopped myself out of a large spread bet on CHTR (just as well) other than that i'm staying out until it looks like there is some sort of direction to the market ,i'm not clever enough to read this one .

Jimmy. Well done as you saw the merits of this one earlier than most of us. Bound to be a shake out in this sort of market even though the analysis by sd and others shows that there is a way further to go. If you are sitting on a really good profit, might be worth taking half of it or, better, recovering your original stake.

Eric ,i took profits a while back and left a few to run ,i also sold those when the market turned ,so i got this one right ,luckily i wasn't in much when the market fell ,except a large spread bet on Charter ,however that was enough to turn me to alcohol .Cheers .

Well done again, Jimmy. A lesson that it has taken me a long time to learn is, if you don't get in early, don't get in at all. Its the early birds that catch the worm. Have you any juicy worms in sight?

This has come storming back ,,i thought it would.

Debtmatters has been my 'star' share. Got in @75p & still holding. Debts.co.uk is a new company to the market & Invocas which floated earlier in the year has apparently 'got the Scottish market sewn up'. Agree with an earlier post, much talk on the boards of the mining & oil stocks but just need to looks at the gains made by Accuma, Debt Free Direct & Begbies Traynor & easy to realise that exposure to this sector is worthy of investment

Gaining back all it's losses now .

Good to see finals showing a 20% improvement on my (hardly dare believe) estimates in post 12 above to 2.8m pre-tax, giving a fully taxed EPS of 7.96p and a PE of 42 / PEG of 0.13.

Looking forward to studying the deails when published on 16th June.

sd

Good to see finals showing a 20% improvement on my (hardly dare believe) estimates in post 12 above to 2.8m pre-tax, giving a fully taxed EPS of 7.96p and a PE of 42 / PEG of 0.13.

Looking forward to studying the deails when published on 16th June.

sd

Results yesterday confirm the trading statement from earlier in the month. Great growth company with a growing market share of a market expected to double in 2006 (having pretty much doubled in 2005 as well). Seems well run and good margins / ROCE. EPS, PE, PEG all looking good as its astronomical rating comes down to market average PE of 14 over the next 2 years. Nice positive statements from Chairman Noel Guilford and CEO Ges Ratcliffe.

Turnover on the IVA business was at the more optimistic level of my two forecasts back in April, but margins were slightly lower at 58.5% than the 60% I anticiapted, with overhead lightly less than my guess. Overall operating profit 12% ahead of my guestimate.

The Unique Business corporate insolvency practice with net assets of 114k acquired from the CEO for 400k has turned in operating profit of 208k very nice too.

Only small cloud to watch on the horizon is the acquisition of loan broker Loanmakers for up to 19M against pre-tax earnings of 1m, to be paid for by 10m loan from RBS and the balance in cash/shares over the next 24 months earn-out. This whooshes the gearing up to 224% - not very clever in this day and age of rising interest rates - and removes all the cash (assuming the large list of debtors pay up) from the B/S for the next couple of years, reducing the prospect of any dividend for the foreseeable future. Still an exit PE of 19 is less than half DEBT's PE of 42 (diluted by end of year shares in issue) so, if it grows as fast as its parent, it could well have a silver lining.

Looking at this year, we are on track for 6.9m operating profit (nearly double turnover, margin of 60% and ooverhead of 2m ??) from the two existing businesses and, say 1.1m from the acquisition, makes 8m, or 5.6m after tax. EPS and PE calculations are difficult to assess given the acquisition of Loanmakers and part payment in shares to be issued, but it should look pretty good for this year and even better next year as the effect of the acquisition washes through and its earnings start to move forward.

sd

DEBT ticking up a few points this morning - i see DFD are due to post their preliminary results tomorrow - might be worth keeping an eye out for, expected to be good.