Efectos de los Agentes Atmosféricos

An independent mandatory survey by an organisation such as the OFT, where companies outside DEMSA will not be reluctant to share the volume of DMPs they manage, would be required to provide a more accurate market size According to our interview and surveys with DEMSA's members, the total

market for DMPs at the end of 2011 came up to 590,000 DMPs which consisted of 320,000 for the commercial sector. The non-DEMSA members that

responded to our survey stated a total of 660,000 DMPs with 340,000 in the commercial sector which was a close estimate to DEMSA's responses In terms of the free-to-consumer sector, we have estimated it to be 220,000-

270,000 DMPs for 2011. This range is based on our desktop research as well as our survey responses with DEMSA members who estimated the market at 270,000 (the three non-DEMSA members who responded to this question estimated the free-to-consumer market at 320,000 DMPs). However, we note that 270,000 DMPs might be the upper range, given that CCCS, the largest free- to-consumer provider appeared to manage c.109,000 DMPs at the end of 2011 (CCCS represented c.120,000 consumers at the end of 2011 and according to our interviews with DEMSA members most of the DMPs undertaken are single with 10%-30% of them being joint. Moreover, CCCS's business information

department told us that only a small number of their DMPs are joint. Therefore, we estimate their joint plans to be c.10% of the total). In addition to CCCS, Payplan appears to be the second largest provider in the free-to-consumer sector with survey respondents and interviewees estimating it administering c.100,000 plans. Beyond these two providers, Christians Against Poverty (CAP) appears to be the closest in terms of size. However, in their annual report, CAP states they supported 4,504 consumers 'work their way out of debt' which indicates that the closest player to CCCS and Payplan manages a maximum of c.4,500 DMPs. As such, we have set the minimum for free-to-consumer DMPs at the 220,000 level

Further to the commercial and free-to-consumer DMPs, our survey with

DEMSA members returned 110,000 cases of DMPs where consumers are liaising directly with creditors. For the purpose of our analysis, we have not taken into account this group of DMPs as we did not have the time to cross reference it, which would require extensive surveys and discussions with creditors. Moreover, as discussed in section 9 creditors do not appear to hold the right level of information on their DMP customers and the ones we interviewed were unable to readily provide us with figures on the number of customers who manage their DMPs directly with them

In terms of the total market debt under DMPs, DEMSA members estimate the total debt outstanding in 700,000 DMPs (market size estimate including the 110,000 managed independently by consumers) is £11.8 billion. Assuming the commercial and free-to-consumer market is indeed c.520,000-645,000 as we calculated, the value of the market debt could be underestimated by DEMSA members. Our survey respondents represented 184,000 DMPs with a total value of £3.5 billion, whilst CCCS has total debt of £3.7 billion for c.109,000 plans. A weighted average between these two cases would bring the total value of the unsecured debt represented by 520,000-645,000 DMPs to £12.8 – £15.2 billion DEMSA members and industry experts estimated the current number of DMCs

in the industry around 250 to 350 companies. An industry expert estimates that, in 2010, there were 300 to 350 DMCs. Following OFT intervention 90 businesses have exited the debt management market since September 2010 However, there are no statistics available on the number of companies at the time or on the number of companies that entered the market since the OFT intervention. Survey respondents also thought that the vast majority of the companies in the field are small independent companies

© 2012 Grant Thornton UK LLP ₄₀ Other market size estimates, 2011

KPI

Number of Debt Management Companies (DMCs) c.250-350

Number of consumers c.570,000-840,000

Volume of new plans, 2011 c.130,000-175,000

UK DMP market size (continued)

In terms of the financially troubled consumers represented by the DMPs, they would be in the range of c.110% – 130% of the number of DMPs in the market (ie c.570,000 – 840,000 consumers). Based on our interviews with major suppliers, c.10% – 30% of the DMPs are joint, whilst CCCS, the largest single DMP provider, stated that a very small number of their DMPs are joint. This is because most unsecured debts in a DMPs are registered under one individual versus secured debts, such as mortgages, which may be joint

However, this does not imply that more than one consumer is not affected by a single DMP since more than one person in a single household is likely to contribute towards the repayment of the DMP

In terms of the new plans generated during 2011, DEMSA members estimated them at c.130,000. This was in close agreement with the responses received by non-DEMSA members who estimated c.140,000 DMPs

However, both of these figures may be underestimated judging by the new plans registered by our DEMSA respondents in 2011 (50,000) and these businesses' approximate market share (c.49%-61% of the commercial sector). Assuming both parameters are correct and accounting for the continued economic downturn, the total volume of new plans for 2011 could have been c. 140,000-175,000 across the market. Moreover, if we account for the number of new DMPs from CCCS in 2011 (27,793) and CCCS's approximate market share (c.17%-21%), then the total number of new DMPs across the market could have been c.130,000-165,000 Debt management industry size

Based on the responses to the survey and interviews with DEMSA members, there were c. 580,000 DMP in 2011

“The OFT does not directly regulate debt management plans, only the businesses who provide them. All traders who provide debt management services are required under the Consumer Credit Act to hold a consumer credit licence covering debt counselling, debt adjusting and credit-repair as appropriate. The OFT holds data on the number of businesses that hold a category of licence, not by market size.”

OFT

Section 6

DEMSA fee structure and profitability

01. Introduction

02. Executive summary

03. Methodology

04. The DMP business model and process

05. Debt management industry size

06. DEMSA fee structure and profitability

07. DEMSA customer profile

08. Debt management company outcomes and savings

© 2012 Grant Thornton UK LLP ₄₂

Introduction

DEMSA fee structure and profitability

This section provides an overview of DEMSA members' aggregate profitability and compares it to other organisations setting up debt management plans as well as companies operating under SIC code 64999, representing companies offering other financial services activities, except insurance and pension funding

We have also analysed the revenues and major costs for DEMSA members both at a total and per debt management plan. The results of this financial analysis indicate that the industry size is much smaller than suggested by the statistics quoted in the BIS Committee Report

Finally, we have provided an explanation of the set-up and monthly fee structures charged by DEMSA members and have quantified the average fees that they charge . As it turns out from our analysis, set-up fees only generate approximately 17% of DMCs' revenues which indicates the importance of ensuring the DMPs' sustainability contrary to industry wide perceptions against the commercial sector The financial analysis in this section is based on desktop sources (downloading

and analysing profit and loss reports from financial databases both for DEMSA members and the companies operating under SIC code 64999) supplemented by the output of the online survey

Surveyed DEMSA members' statistics, 2011(a)

KPI Value

Total revenues from DMP activities(a) £92,153,868

Average revenue per DMP £554

Average labour costs per DMP £208

Average marketing costs per DMP £112

Average EBITDA per DMP £109

EBITDA margins from DMP activities 19.6%

Total value of debt outstanding for DMPs under management(a) £3,488,670,503

Average value of debt managed by DMP £18,953

7.4% 15.4% 14.9% _14.0% 0% 2% 4% 6% 8% 10% 12% 14% 16% 18% DEMSA Non-DEMSA commercial Non-fee charging UK SIC Code 2007 - 64999 P B T m ar gi n, 2 01 0