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Compass Finance back in profit

• FROM: July 2006 |
• TAGS: general financial, compass finance |
• COMMENTS: Add yours

• Compass Finance back in profit
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Compass Finance floated on AIM two years ago and was expected to grow rapidly. Although the consumer loans broking business has grown, the pace of the growth has not been as fast as expected and didn’t keep pace with increases in costs. New management
has come in and refined marketing which has helped Compass move back into profit in the six months to March 2006. They have also moved into new areas making Compass a more wideranging debt advisory business.

A debt management business has been started and the £2m acquisition of The Debt Advisor takes Compass into the Individual Voluntary Arrangement market. This means Compass is a much better balanced group which continues to have strong growth prospects. Previously Compass had to pass IVA opportunities to other advisers thereby losing out on potential revenues. The IVA business can build up significant contracted revenue streams over a number of years. However, IVA advisers consume cash
as they grow because the initial fee is recognised straight away while it takes a number of months of payments by the person with the IVA to cover the fee.

Some of the £6.25m raised in placings this year will finance its working capital. The rest of the business should generate cash so this
will also help.

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