Diversification is paying off, says debt management specialist Relax Group, as it seeks organic growth and further acquisition opportunities.

AIM-quoted Relax, formerly Debts.co.uk, has been switching its business mix from primarily handling individual voluntary arrangements (IVAs) to debt and arrears book management, and says results for the year to last month should be in line with market expectations.

These see the company, created in its present form by Debts.co.uk, buying PB Recovery for £1.25 million and Relax Finance for £3 million in shares and cash, showing a £1.16 million pre-tax profits fall to £2.24 million in 2007-08, followed by a strong surge to £4.18 million pre-tax for the year to July 2009.

Relax, steered by chief executive officer Paul Carter, says fees have been coming down in the IVA market, now only 35 per cent of total turnover. The company says it has ‘more than offset’ this by cutting the cost of generating enquiries and back office efficiencies.  

Debt management plans handled by Relax have risen 30 per cent year-on-year. The company is looking to expand its mortgage business and, though mortgages and loan completions are ‘momentarily constrained’ by the credit crunch, directors say they expect ‘accessibility to funding’ to improve towards 2009.

Shares in Debts.co.uk/Relax have hitherto performed disastrously, dropping from 219.5p two years ago to 22.5p last month. But they have lately crept up to 24.5p, valuing the company at £7.5 million, and, with a new business mix and strong profits recovery in prospect, they could regain some favour in due course. 

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Relax Group	AIM	£7.17m	23.50p	0.00p
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